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Statement of Changes in Equity

Equity is defined as the residual interest in the assets of an entity after deducting all liabilities. It is equivalent to net assets, which are total assets minus total liabilities. The statement of changes in equity reconciles the carrying amount of each component of equity at the beginning and end of the period, showing changes from profit/loss, other comprehensive income, and transactions with owners. It directly affects retained earnings and is now part of the statement of changes in equity.

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152 views9 pages

Statement of Changes in Equity

Equity is defined as the residual interest in the assets of an entity after deducting all liabilities. It is equivalent to net assets, which are total assets minus total liabilities. The statement of changes in equity reconciles the carrying amount of each component of equity at the beginning and end of the period, showing changes from profit/loss, other comprehensive income, and transactions with owners. It directly affects retained earnings and is now part of the statement of changes in equity.

Uploaded by

Karylle Entino
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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 Define as the residual interest in the assets of

an entity after deducting all of the liabilities.

 In other word, equity is equivalent of net


assets, meaning total assets minus total
liabilities.
 Share Capital

 Share premium

 Retained earnings
 It is a formal statement that shows the
movements in the elements or components of
the shareholder’s equity
1) Comprehensive income for the year.
2) For each component of equity, the effect of
changes in accounting policies and
corrections of errors.
3) For each component of equity, a
reconciliation between the carrying amount
at the beginning and end of the period,
separately disclosing from:
a) Profit or loss

b) Each item of other comprehensive income

c) Transaction with owner’s in the capacity as


owners showing separately distributions by
and distribution to owners
 Shows the affecting directly the retained
earnings of an entity.

 Statement of retained earnings is now part of


the statement of changes in equity.
a) Net income or loss for the period
b) Prior period errors
c) Dividends declared and paid to
shareholders
d) Effect of change in accounting policy
e) Appropriation of retained earnings
a) Legal requirement

b) Contractual requirement

c) Entity policy

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