what is accumulated other comprehensive income 
accumulated other comprehensive income oci includes all unrealized gains and losses reported in the equity section of the balance sheet that are netted below retained earnings other comprehensive income can consist of gains and losses on certain types of investments pension plans and hedging transactions it is excluded from net income because the gains and losses have not yet been realized investors reviewing a company s balance sheet can use the accumulated oci account as a barometer for upcoming threats or windfalls to net income other comprehensive income vs realized incomean investment must have a buy transaction and a sell transaction to realize a gain or loss if for example an investor buys ibm common stock at 20 per share and later sells the shares at 50 the owner has a realized gain per share of 30 realized gains and losses are reported on the income statement an unrealized gain or loss means that no sell transaction has occurred other comprehensive income reports unrealized gains and losses for certain investments based on the fair value of the security as of the balance sheet date if for example the stock was purchased at 20 per share and the fair market value is now 35 per share the unrealized gain is 15 per share companies can designate investments as available for sale held to maturity or trading securities unrealized gains and losses are reported in oci for some of these securities so the financial statement reader is aware of the potential for a realized gain or loss on the income statement down the road types of accumulated other comprehensive incomeunrealized gains and losses relating to a company s pension plan are commonly presented in accumulated other comprehensive income oci companies have several types of obligations for funding a pension plan a defined benefit plan for example requires the employer to plan for specific payments to retirees in future years if the assets invested in the plan are not sufficient the company s pension plan liability increases a firm s liability for pension plans increases when the investment portfolio recognizes losses retirement plan expenses and unrealized losses may be reported in oci once the gain or loss is realized the amount is reclassified from oci to net income oci also includes unrealized gains or losses related to investments for example a large unrealized loss from bond holdings today could spell trouble if the bonds are nearing maturity in addition to investment and pension plan gains and losses oci includes hedging transactions a company performs to limit losses this includes foreign currency exchange hedges that aim to reduce the risk of currency fluctuations a multinational company that must deal with different currencies may require a company to hedge against currency fluctuations and the unrealized gains and losses for those holdings are posted to oci 