Other Income: Definition, Detailed Examples & Negative OI

Most people have one job providing their primary source of income. If you have a side hustle or part-time gig, you have a second source of income.

The same thing applies to businesses. While a company’s primary revenue stream comes from the sale of a core product or service, they can have “side hustles,” which are called other income.

In finance, its important to differentiate between these primary and secondary sources of income, since they behave differently, and investors will want to see each separately.

This article defines other income, shows how it appears on financial statements, provides a comprehensive list of detailed examples, and discusses several nuances surrounding the topic.


Other income is income arising from activities unrelated to a company’s core business that consist of either (1) selling activities such as interest on loans (2) contractual earnings such as legal damages, or (3) accounting adjustments such as gains on foreign exchange conversion.

A key takeaway is that other income is NOT revenue! Revenue is earnings from the sale of products and/or services in the core business of the company, whereas other income is unpredictable earnings outside the business focus.

What is other income on the P&L?

Since other income is not revenue, where do we find it on the profit & loss statement (aka income statement)?

The answer is that each company presents this information differently. Some show it at the top of the income statement, just below revenue, whereas others show it below operational expenses.

Moreover, as we’ll see below, some companies group other income and other expenses into one line (which can therefore be negative when expenses are greater than income).

That said, in most cases you should look for other income just below operational expenses. Let’s look at example of a few large companies to see what this looks like: Amazon, 3M, CVS, and Walmart.

Amazon Other Income Example

Amazon’s other income is booked on the same line as other expenses in the company’s P&L. In 2018, other expenses exceeded other income, so the value was negative. In 2019 and 2020, however, other income exceeded other expenses, so the line was positive.

3M Other Income Example

3M does not have a normal “other income” line. Instead, they list a gain of sale of businesses as standalone other income. This can be tricky to recognize for beginners because the words “other income” aren’t directly written. In general, any “gain,” “earnings,” or “income” shown on the P&L but excluded in revenue is other income, even if the word “income” is not written.

CVS Other Income Example

CVS has an other income line, but you can see that it is negative in all three years shown above. What this means is CVS implicitly groups other income and other expenses on the same line.

Walmart Other Income Example

Walmart explicitly lists its other gains and losses on the same line. We see here that other gains were far greater than losses in 2018, but the opposite is true from 2019 to 2020.

Why show other income separately? Investor Visibility

If revenue and other income are ways in which the business makes money, why should we list them separately? The answer requires a small amount of theory.

At its core, accounting is a documentation function whose aim is to numerically represent a business in a set of accounts. This means “like” activities must be booked in the same accounts. But are revenue and other income “like” activities?

Consider a company that sells dog food. For every pound of dog food it sells, the company generates $10. It also has to pay $4 dollars for that pound of food. This means the profitability of the food is $6, or a 60% margin ($6/$10). This margin is part of the behavior of the product selling activity.

Imagine the same company provides small loans to its employees. Those loans are usually 6 months in duration and generate 1% effective yield. But they incur no costs, save for a small number of debtors who don’t repay the principle. For simplicity’s sake, let’s say each loan generates $5 in revenue and incurs no costs.

In this case, including income from loans on the same line as revenue will artificially inflate the profit margin. Adding $10 in sales from dog food to $5 from the loans, our total income is $15, but total costs remain $4. This equates to an aggregate margin of $11, or 73% ($11/$15).

However, those loans are periodic and absent in some periods. Therefore, showing them as revenue would misrepresent the business’s activities. To understand each activity separately, we need to book them separately. This is why loans fall under other income.

Examples: Comprehensive List

There are three main types of other income. The first is other transactional income, the second is contractual income, and the third is accounting adjustments.

Other Income Types and Examples

Loan Interest (Transactional)

Loan interest other income occurs when a company provides loans as side income (for banks loans are the primary source of income, but not for other companies — read about Interest vs. Profit).

Usually these loans are provided to employees or non-majority subsidiary companies. They generate a small amount of income and do not incur any costs, unless debtors default on their loans. We looked at these earlier so I won’t provide an example here.

Gain on Sale of Assets (Transactional)

A gain on the sale of an asset occurs when an asset is sold for more than it’s carrying amount and is equal to [sales price] – [carrying amount] (not to be confused with proceeds from the sale of an asset, which is the total cash inflow, aka the sales price).

For example, imagine our dog food company has a large processing machine it originally bought for $100,000. It has depreciated by $60,000, which makes its carrying value $40,000. The food company sells the machine for $50,000, or $10,000 more than its carrying value.

This $10,000 must be booked as a Gain on the Sale of Assets on the income statement, which was the case for 3M in the examples above. The journal entries would look like this:

Journal Entries for Other Income from Gain on Sale of Assets

Sale of Marketable Securities (Transactional)

Gains on the sale of marketable securities occur when a company sells stock or bond holdings for more than their cost.

For example, if a company buys Apple stock for $140 dollars in January and sells it for $150 in March, it must credit the $140 at-cost value from current assets and credit other income for $10, while also debiting cash for $150, since there was a receipt in that amount.

Gains on Foreign Exchange Conversion (Transactional)

Gains on Foreign Exchange Conversion occur when a company sells a good in a foreign currency and the exchange rate changes in favor of the foreign currency. Let’s unpack this with an example.

Imagine our dog food company sells one pound of feed in France for 10 EUR and the exchange rate for USD to EUR is 1:1, meaning 1 EUR get’s you 1 USD. The transaction is booked at 10 USD. However, payment in made one month later.

At that time, the exchange rate is USD:EUR 1.20:1, meaning one EUR is equal to 1.20 USD. This means the value of the EUR payment has increased by 20%, and you need to record 2 USD (10 EUR * 1.20) in gains on foreign exchange conversion.

This can seem complicated. Just think of the currencies in terms of where the money is made relative to the home country, and where it’s made is what will impact your company. You made money in Europe, so when the EUR becomes more valuable, you benefit from that change in your home country. Inversely, when the EUR becomes less valuable, you lose money when converting back to your home country.

Fees for Late Payment (Contractual)

In some industries, usually B2B ones, customers have an obligation to make payment by a given date after delivery of product or service, often 30 days. If they don’t, some contracts provide for a late payment fee.

This late payment fee must be booked separately as other income, since it is unpredictable and does not relate to the core delivery of the service. In the same way that loans can inflate margins, so too can late fees when they are heavily present in one period but not in another.

That said, some late fees are so common that they are included in normal revenue. In some high-risk credit card businesses, late fees are a normal part of operations. Since they are common, they can be included in revenue, depending on the accounting framework (IFRS, USGAAP).

Income from Legal Damages (Contractual)

Just like individuals, companies sometimes go to court to resolve disputes. When a company sues and wins, there are often damages paid, which is a source of other income.

Gain from Asset Revaluation (Adjustment)

Under IFRS, but not under USGAAP, assets can be adjusted to increase their value. When the fair value of an asset is worth more than its carrying amount, the company debits the asset account and credits another…

…but be careful. Gains from Asset Revaluation are a form of other income not recorded on the income statement. Instead, they are booked as a credit to asset surplus in the equity portion of the balance sheet.

While this is not a called gain, it should be considered by investors as an adjustment income on the value of the asset because, if sold, the asset would likely sell at this surplus price.

Unrealized Gains on Marketable Securities (Adjustment)

Unrealized gains on marketable securities occur when the value of a security has increased in the market, but the holder has not yet sold the security at the close of accounting.

Accountants will book the increase of the marketable securities on the current asset account, and the counterparty account will be other income. The entry is debit marketable securities and credit other income.

Unrealized Gains on Foreign Exchange Conversion (Adjustment)

Unrealized gains are similar to marketable securities, except they are booked directly on the asset receivable account and a special account called accumulated other comprehensive income (owners equity). The entry is debit receivable and credit accumulated other comprehensive income under owners equity.

When the gain is realized, it is removed from equity and placed on the P&L as other income.

Negative Other Income

In some cases, large companies put other income and other expenses on the same line. When the sum of other expenses is greater than the sum of other income, the other income account can appear negative.


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About the Author


Noah is the founder & Editor-in-Chief at AnalystAnswers. He is a transatlantic professional and entrepreneur with 5+ years of corporate finance and data analytics experience, as well as 3+ years in consumer financial products and business software. He started AnalystAnswers to provide aspiring professionals with accessible explanations of otherwise dense finance and data concepts. Noah believes everyone can benefit from an analytical mindset in growing digital world. When he's not busy at work, Noah likes to explore new European cities, exercise, and spend time with friends and family.


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