Accumulated Other Comprehensive Income
Accumulated Other Comprehensive Income (ACI) measures a company's income from unrealized gains and losses on securities, derivatives, currency hedges and unrealized pension liablities.
ACI is typically found on a company's balance sheet. It is important to note that ACI is not included in a company's net income, which is typically found on a company's income statement and measures gains and losses that have already been realized. Depending on the company, ACI can be a critical driver of shareholder's equity.
In 2008 company ABC had shareholders' equity of $100MM. In 2008, the company generated $15MM in net income and paid no dividends. The company, however, invested $20MM in complex derivatives which have since fallen in value and are now worthless. The company's owner has not sold these derivatives yet, because he hopes that they will increase in value by the end of 2009. The company has a total unrealized loss or ACI of $20MM. As a result, the company's shareholders' equity for 2008 was $95MM ($100MM +15MM -$20MM).