Cumulative effect of a change in accounting principle: remove it from the income statement

The comprehensiveness of income, a key definition in accounting, remains contentions despite decades of debate. A review of this debate reveals that investors have traditionally argued for more comprehensive definitions of income, whereas managers have traditionally argued for less comprehensive measures. We compare performance for both income definitions and component sets. Our results reveal that among income definitions, comprehensive income defined by Statement 130 dominates both traditional net income and fully comprehensive income. No definition dominates clearly. This, our findings indicate that different definitions of income are more decision useful in different applications and that comprehensive income component disclosures are useful.