Statement of Changes in Equity

A statement of changes in equity does exactly as it says on the tin!  It shows the changes to the shares and reserves of the company over the financial year.  The headings across the top could be remembered by the term I Should Really Get Revising Tonight!

The changes to equity are listed down the left hand side.  These could include a number of things (see here)

• Opening capital are the values at the start of the year
• Revaluation reserve is the increase (decrease) of any property valuations
• Dividends paid are deducted from retained earnings.  Multiply the number of shares entitled to a dividend by the dividend per share to be paid
• Bonus issue is where shares are given to shareholders for free (see bonus and rights issue here).  The issued shares goes up and the share premium is deducted by the same amount.  If there is insufficient funds in the share premium deduct from revaluation reserve and keep going to the right until you have deducted the same amount
• Rights issue is where shares are sold.  The nominal amount per share goes in the issued share capital whilst the premium goes in the share premium.  This needs to be done for every share sold.  (see bonus and rights issues here)
• Retained Earnings for the year is the amount of profit after tax the firm has made. 
• The total for each column is then calculated at the bottom!

Below is a sample Statement of Changes in Equity  with entries to show where the figures would be made.  Negative figures are shown in brackets. If the company makes a loss then it is a retained loss for the year and is shown in brackets.