1. Components of OCI
Other Comprehensive Income comprises items of income and expense (including reclassification adjustments) that are not recognized in profit or loss as required or permitted by other standards.
┌───────────────────────────────────────┬──────────────────────────────────────┐
│       IFRS Components (IAS 1)         │       US GAAP Components (ASC 220)   │
├───────────────────────────────────────┼──────────────────────────────────────┤
│ • Gains/Losses on Revaluation of PPE  │ • Not allowed (Revaluation of PPE    │
│ • Actuarial Gains/Losses on Pensions  │   is forbidden under US GAAP)        │
│ • Foreign Currency Translation Adjust.│ • Foreign Currency Translation Adjust.│
│ • Fair Value Gains on FVOCI Debt/Equity│ • Fair Value Gains on Available-for- │
│ • Effective Portion of Cash Flow Hedges│   Sale Debt Securities               │
└───────────────────────────────────────┴──────────────────────────────────────┘

2. Recycling (Reclassification Adjustments)
Recycling refers to the process where items previously recognized in OCI are moved (reclassified) to the net income statement as a realized gain or loss.
  • The Big Split on Equity: Under IFRS 9, when an entity disposes of an equity instrument measured at Fair Value through OCI (FVOCI), the cumulative gain or loss cannot be recycled to the profit or loss statement. It can only be transferred directly within equity (to retained earnings).
  • US GAAP (ASC 321): All equity securities (except those under the equity method or without a readily determinable fair value) are measured at fair value through Net Income directly, eliminating the concept of an OCI path for ordinary equity investments.

 
PreviousNext