Equity in Financial Reporting Quiz

Equity and Financial Statements

• Equity represents the residual interest in the assets of an entity after deducting its liabilities.

Disclosure of Share Capital Information

• According to IAS 1, the following information should be disclosed about each class of share capital:
  • Number of shares authorized
  • Number of shares issued and fully paid
  • Number of shares issued but not fully paid
  • Par value per share
  • Reconciliation of the number of shares outstanding at the beginning and end of the period

Important Information in Financial Statements

• An important information to be included in the financial statements according to IAS 1 is the reconciliation of the number of shares outstanding at the beginning and end of the period.

Recognition of Loss on Exchange Rate

• A loss on exchange rate is recognized in Other Comprehensive Income (OCI) when the exchange rate changes and the entity has a foreign currency transaction.
• When the payables are not paid yet, the loss on exchange rate is still recognized in OCI.

Mandatory Information in Statement of Changes in Equity

• According to IAS 28, the following information is mandatory to be included in the statement:
  • Total comprehensive income
  • Transactions with owners in their capacity as owners

Statement of Changes in Equity

• The statement of changes in equity includes:
  • Comprehensive income
  • Transactions with owners
  • Changes in equity resulting from those transactions

Reconciliation in Statement of Changes in Equity

• The reconciliation in the statement of changes in equity discloses the movements in equity during a period.

Presentation of Dividends

• The amount of dividends recognized as distributions to owners should be presented in the statement of changes in equity.

Overall Change in Equity

• The overall change in equity during a period represents the net effect of all transactions and events that change equity during that period.