Statement of Changes in Equity JOR

(Summarized from Valix, Empleo and IAS 1)

Equity
Equity is defined as the residual interest in the assets of an entity after deducting all of its
liabilities.

Subclassification of equity in the statement of financial position:

1. Share capital – paid-in capital contribution of shareholders.
2. Share premium – these are contributions of shareholders in excess of par value.
3. Retained earnings – accumulated net income or net loss, prior period errors, accounting
changes, and reorganization of the entity.
4. Cumulative other comprehensive income – accumulated OCI of the entity.

Information to be Presented in the Statement of Changes in Equity

PAS 1, par 106, the statement of changes in equity includes the following information:
1. Total comprehensive income for the period, showing separately the total amounts
attributable to owners of the parent and to non-controlling interests;
2. For each component of equity, the effects of retrospective application or restatement
recognized in PAS 8;
3. For each component of equity, a reconciliation between the carrying amount at the
beginning and the end of the period, separately disclosing changes resulting from:
a. Profit or loss
b. Other comprehensive income; and
c. Transactions with owners
i. Contributions
ii. Distributions
iii. Changes in ownership interest in subsidiaries

Information to be Presented in the Statement of Changes in Equity or in the Notes

1. For each component of equity an entity shall present an analysis of other comprehensive
income by item.
2. The amount of dividends recognized as distributions to owners during the period, and the
related amount of dividends per share.

Statement of Retained Earnings

This statement shows the changes directly affecting retained earnings.
1. Net income or loss for the period
2. Prior period errors
3. Dividends declared
4. Effect of changes in accounting policy
5. Appropriation of retained earnings
6. Treasury share transactions
7. Conversion of preferred shares to ordinary shares
Statement of Changes in Equity JOR
(Summarized from Valix, Empleo and IAS 1)

Important items to consider

• Effect of a change in accounting policy – shown as an adjustment to the beginning
balance of retained earnings.
o Net income is understated due to a change in AP, add this to the beginning
balance of RE
o Net income is overstated due to a change in AP, deduct this to the beginning
balance of RE.

• Retirement of treasury shares − if the retirement price of the treasury shares is more than
its acquisition price, and the share premium from treasury shares is not enough, the
difference is charged to RE.

• Conversion of preference shares to ordinary share capital – if the original issue price of
the preference share is less than the par value of the ordinary share, the difference is
charged to RE.

Retained Earnings Appropriation

Appropriation may be due to the following:
1. Legal requirement, treasury shares and dividends
2. Contractual requirement, for example bond redemption and other guarantees
3. Entity Policy, for example to prepare for contingencies, acquisition of properties
Statement of Changes in Equity JOR
(Summarized from Valix, Empleo and IAS 1)

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

Additional Retained Earnings

Capital Paid-in Remeasurement UG on Total
Appropriated Unappropriated
Stock Capital Loss on DBO FVOCI Equity
Balances at January 1, 2021 P1,000 P300 P185 P1,474 (P35) P2 P2,926
Net Income − − − 546 546
OCI − − − − (104) (1) (105)
Comprehensive Income − − − 545 (104) (1) 441
Dividends Declared − − − (500) − − (500)
Reversal of appropriation − − (185) 185 − − −
Appropriation for Business expansion − − 200 (200) − − −
At December 31, 2021 P1,000 P300 P200 P1,505 (P139) P1 P2,867