Statement of Changes in Equity is the reconciliation between the opening balance and closing balance of shareholder’s equity. It is a financial statement which summarises the transactions related to the shareholder’s equity over an accounting period. Movement in retained earnings, other reserves and changes in share capital such as the issue of new shares and payment of dividends are recorded in this report.
The difference between the assets and liabilities from one accounting period to the next will give you the movement in equity. This information can be obtained from the balance sheet of the entity. However, this will not provide the details of the changes that have happened in the equity and for this purpose, this statement of changes in equity is required. Under Indian GAAP, there is no requirement for this statement; however, Schedule III of the Companies Act 2013 requires such movement in shareholder’s equity to be presented as part of notes to accounts. As per the IND AS, this statement of changes in equity is to be presented and it includes the following:
Comprehensive income is those income listed after the net income on the income statement.
A statement of equity generally summarises the changes in the equity components listed below:
As seen above, the Statement of Equity provides detailed information about the movements in the equity share capital over an accounting period which is not provided elsewhere in the financial statements. Such details will be helpful for the shareholders and investors to make informed decisions regarding their investments.
*More detailed notes related to the Statement of Changes in Equity are generally presented as commentaries to such statement.