(Intermediate Accounting 3)

LECTURE AID

ZEUS VERNON B. MILLAN

Chapter 5 Statement of Changes in Equity
Related standard: PAS 1 Presentation of Financial Statements

Learning Objectives
• Prepare a Statement of Changes in Equity.
• Differentiate between Statement of Profit or Loss and Other
Comprehensive Income and Statement of Changes in Equity.

INTERMEDIATE ACCTG 3 (By: Zeus Vernon B. Millan)

Statement of Changes in Equity

The statement of changes in equity shows the following information:

a. Effects of change in accounting policy (retrospective application) or
correction of prior period error (retrospective restatement);
b. Total comprehensive income for the period; and
c. For each component of equity, a reconciliation between the carrying
amount at the beginning and the end of the period, showing separately
changes resulting from:
i. profit or loss;
ii. other comprehensive income; and
iii. transactions with owners, e.g., contributions by and distributions to owners.

INTERMEDIATE ACCTG 3 (By: Zeus Vernon B. Millan)

SCI vs. SCE
• “Non-owner” changes in equity are presented in the statement of
comprehensive income while “owner” changes (e.g., contributions by
and distributions to owners) are presented in the statement of changes
in equity. This is to provide better information by aggregating items
with shared characteristics and separating items with different
characteristics.

INTERMEDIATE ACCTG 3 (By: Zeus Vernon

B. Millan)
Disclosure of dividends

• Dividends declared by an entity are disclosed either in the (a) notes

or (b) statement of changes in equity.

INTERMEDIATE ACCTG 3 (By: Zeus

Vernon B. Millan)