OCI is one of the least understood components of financial reporting under IFRS. Let’s break it down in a simple, practical way.
🔹 What is OCI?
Other Comprehensive Income (OCI) is part of the total income a business reports, but it’s not part of regular profit or loss. Instead, it captures gains and losses that arise from revaluation, translation, or remeasurement—things that aren’t part of your day-to-day operations.
🔹 Why Does OCI Matter?
It matters because it separates operating performance from changes in asset values or financial instruments. This separation gives a clearer picture of how well a business is truly performing operationally—without distortion from market fluctuations or accounting revaluations.
🔹 Common Examples of OCI Items
✅ Actuarial gains/losses on defined benefit pension plans
✅ Revaluation gains/losses on property, plant, and equipment
✅ Cash flow hedge adjustments
✅ Foreign currency translation differences for foreign operations
✅ Unrealized gains/losses on certain financial instruments (e.g., equity investments classified as FVOCI)
🔹 Simple Examples
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Asset Revaluation:
A building owned by the company increases in value—from ₦90 million to ₦150 million.
The ₦60 million gain doesn’t go into your operating profit—it goes into OCI.
Why? Because the gain isn’t due to your business performance. It’s a paper gain from revaluation. -
Investment Loss:
Your shares in a public company fall in value from ₦8 million to ₦3 million.
That ₦5 million unrealized loss goes to OCI.
Again, it’s not because of your business operations—it’s due to market fluctuations.
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