Statement of Changes in Equity
A statement of changes in equity summarizes the movement in the equity accounts during the year namely share capital, share premium, retained earnings, revaluation surplus, unrealized gains on investments, etc.
A statement of changes in equity is an important component of financial statements since it explains the composition of equity and how has it changed over the year. Typical information we can get from a statement of changes in equity include:
- The amount of new share capital issued
- The amount of dividend paid during the year to shareholders
- The amount by which PPE is valued up or valued down
- The amount of net income earned during the year
- The amount of net income retained during the year
- Any movement in the unrealized loss or gain reserve and reserve for changes in foreign exchange gain or loss, etc.
Written by Obaidullah Jan