STATEMENT OF CHANGES IN EQUITY

The statement of changes in equity is a basic statement that shows the movements
in the elements or components of the shareholders’ equity.

The statement or retained earnings is no longer required basic statement but it is a

part of the statement of changes in equity.

An entity shall present a statement of changes in equity showing the following:

1. Comprehensive income for the period
2. For each component of equity, the effects of changes in accounting policies
and correction of errors.
3. For each component of equity, a reconciliation between the carrying amount
at the beginning and end of the period, separately disclosing changes from:
a. Profit or loss
b. Each item of other comprehensive income
c. Transactions with owners in their capacity as owners showing separately
contributions by and distributions to owners.

AMV Company
Statement of Changes in Equity
For the year ended December 31, 2021

Share Retained
Capital Reserves Earnings
Balances, Jan. 1, 2021 xxx xxx xxx
Correction of errors resulting from prior year xxx
Change in accounting policy xxx
Issuance of ordinary shares at a premium xxx xxx
Profit/Loss xxx
Other comprehensive income xxx
Dividends declared xxx
Balances, December 31, 2021 xxx xxx xxx
ILLUSTRATIVE PROBLEM:
The following data are available for AMV Company:

Balances, January 1, 2021:

Ordinary Share Capital P5,000,000
Reserves:
Share premium P1,500,000
Cumulative Unrealized Gain on Debt
Investment at FVOCI 500,000 2,000,000
Retained Earnings 1,000,000
Understatement of 2020 depreciation 100,000
Effect of change from weighted average to FIFO inventory method
(credit) 300,000
Ordinary shares issued during the year, 10,000 shares, P100 par,
issued at P150 per share
Preference shares issued during the year, 5,000 shares, P50 par,
issued at P100 per share
Profit for the year 2021 1,550,000
Dividends paid during the year 400,000
Unrealized Gain on Debt Investment at FVOCI 50,000
Retained earnings appropriated for contingencies brought
by COVID 19 pandemic 200,000

AMV Company
Statement of Changes in Equity
For the year ended December 31, 2021

Share Retained
Capital Reserves Earnings
Balances, Jan. 1, 2021 P P2,000,000 P1,000,000
5,000,000
Correction of errors resulting from prior year’s
depreciation (100,000)
Change in accounting policy from weighted
average to FIFO - credit 300,000
Issuance of 10,000 ordinary shares with P100 par
at P150 per share 1,000,000 500,000
Issuance of 5,000 preference shares with P50 par
at P100 per share 250,000 250,000
Profit 1,550,000
Unrealized Gain on Debt Investments at FVOCI 50,000
Dividends paid during the year (400,000)
Current appropriation for contingencies 200,000 (200,000)
Balances, December 31, 2021 P6,250,000 P3,000,000 P2,150,000