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Statement of changes in equity
Extract from FRS102: Section 6.2-6.3A
Purpose
6.2 The statement of changes in equity presents an entity’s profit or loss for a reporting period, other comprehensive income for the period, the effects of changes in accounting policies and corrections of material errors recognised in the period, and the amounts of investments by, and dividends and other distributions to, equity investors during the period.
Information to be presented in the statement of changes in equity
6.3 An entity shall present a statement of changes in equity showing in the statement:
(a) total comprehensive income for the period, showing separately the total amounts attributable to owners of the parent and to non-controlling interests;
(b) for each component of equity, the effects of retrospective application or retrospective restatement recognised in accordance with Section 10 Accounting Policies, Estimates and Errors; and
(c) 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:
(i) profit or loss;
(ii) other comprehensive income; and
(iii) the amounts of investments by, and dividends and other distributions to, owners, showing separately issues of shares, purchase of own share transactions, dividends and other distributions to owners, and changes in ownership interests in subsidiaries that do not result in a loss of control.
Information to be presented in the statement of changes in equity or in the notes
6.3A For each component of equity, an entity shall present, either in the statement of changes in equity or in the notes, an analysis of other comprehensive income by item (see paragraph 6.3(c)(ii)).
OmniPro comment
See illustration of the above guidance below:
Example 1: Consolidated Statement of Change in Equity
For the Year Ended 31 December 2015
|
|
Equity Share Capital |
Revaluation Reserve |
Capital redemp-tion Reserve |
Retained Earnings |
Share premium Reserve |
Total attributable to the Parent |
Non-controlling interest |
Total Equity
|
|
|
CU |
CU |
CU |
CU |
CU |
CU |
CU |
CU |
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 January 2014 |
100,000 |
225,000 |
115,375 |
115,375 |
1,000 |
331,375 |
100,000 |
441,375 |
|
|
|
|
|
|
|
|
|
|
|
Changes in ownership interests in subsidiaries which do not result in a loss of control |
|
|
|
|
|
– |
(100,000) |
– |
|
Profit for the year |
|
10,000 |
|
83,818 |
|
91,818 |
2,000 |
93,818 |
|
|
|
|
|
|
|
|
|
|
|
Balance at 31 December 2014 |
100,000 |
225,000 |
0 |
209,193 |
1,000 |
|
2,000 |
535,193 |
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 January 2015 |
100,000 |
225,000 |
0 |
209,193 |
1,000 |
0 |
0 |
535,193 |
|
|
|
|
|
|
|
|
|
|
|
Equity Shares issued net of issue costs |
20,000 |
|
|
|
5,000 |
|
|
25,000 |
|
|
|
|
|
|
|
|
|
|
|
Profit for the year |
|
|
|
1,005,772 |
|
1,005,772 |
10,000 |
1,005,772 |
|
|
|
|
|
|
|
|
|
|
|
Equity dividends paid (see note XX) |
|
|
|
(9,900) |
|
(9,900) |
(100) |
(10,000) |
|
|
|
|
|
|
|
|
|
|
|
Capitalisation of shares |
1,000 |
|
|
(1,000) |
– |
|
|
– |
|
|
|
|
|
|
|
|
|
|
|
Changes in ownership interests in subsidiaries which do not result in a loss of control |
|
|
|
|
|
– |
(100,000) |
– |
|
|
|
|
|
|
|
|
|
|
|
Buyback of own shares |
(1,000) |
|
1,000 |
(2,000) |
|
(2,000) |
|
(1,000) |
|
|
|
|
|
|
|
|
|
|
|
Other Comprehensive Income |
|
|
(15,000) |
|
(15,000) |
(15,000) |
|
(15,000) |
|
|
|
|
|
|
|
|
|
|
|
Balance at 31 December 2015 |
109,000 |
225,000 |
(14,000) |
1,214,965 |
(15,000) |
XXXX |
10,100 |
1,554,965 |
The below could be included in the notes to the financial statements
i) Revaluation reserve
The revaluation reserve arises as a result of the company’s policy of revaluing property, plant and equipment on a regular basis. During the year the depreciation net of the release of deferred tax on the uplift on the valuation was transferred from profit and loss reserves to the revaluation reserve. On inception of the revaluation reserve the reserve was recorded net of deferred tax.
ii) Cash flow hedge reserve
The cash flow hedge reserve is used to record transactions arising from the company’s cash flow hedging arrangements. These are expected to crystalise within the next 12 months as detailed in note X.
iii) Non-distributable reserve
This reserve arose on transition to FRS 102, where the entity applied the exemption in Section 35 of FRS 102 to deem a previous revaluation on property as deemed cost. The amount included in the reserve is net of deferred tax at the rate the asset is expected to be realised. During the year the depreciation net of the release of deferred tax on the uplift on the valuation was transferred from profit and loss reserves to the non-distributale reserve. On inception of the revaluation reserve the reserve was recorded net of deferred tax.
iv) Capital redemption reserve
The capital redemption reserve reflects the nominal value of shares bought back by the company. There was no activity on this reserve in the current year
v) Share premium
The share premium reflects the premium received on shares issued by the company. The increase arises due to the allotment of 10,000 shares above par during the year as detailed in note X.
vi) Capital development fund
The capital development fund is operated to accumulate funds to meet the cost of further development expenditure. It is envisaged that if the fund is not used for development, either ordinary shares will be issued in respect of amounts collected by the fund, or that contributions received will be refunded to the members. The issue of shares, refund of monies, or utilisation of the reserve for development purposes is at the discretion of the XXXXXX. No amount was allocated to the reserve during the year.
vii) Non-controlling interest
The non-controlling interest reserve reflects the proportion of the net assets owned by non-wholly owned subsidiaries. The movement in the year reflects the proportion of profits and other comprehensive income allocated to the non-controlling party.
Or
During the year the group acquired the remaining x% of XYZ Limited for XXX. As a result the non-controlling interest was derecognised and the balance was posted to profit and loss reserves in line with Section 22 of FRS 102.
viii) Other reserves
Other reserves relate to costs incurred on the issue of share based payments to employees which was required to be accounted for in equity under Section 26 of FRS 102.
The below example illustrates the requirements for a non-group company
Example 2: Statement of Change in Equity – Non Group Company
For the Year Ended 31 December 2015
|
|
Equity Share Capital |
Revaluation Reserve |
Capital redemp-tion Reserve |
Retained Earnings |
Share premium Reserve |
Total Equity |
|
|
|
|
|
|
|
|
|
|
CU |
CU |
CU |
CU |
CU |
CU |
|
Balance at 1 January 2014 |
100,000 |
225,000 |
115,375 |
115,375 |
1,000 |
441,375 |
|
|
|
|
|
|
|
|
|
Changes in ownership interests in subsidiaries which do not result in a loss of control |
|
|
|
|
|
– |
|
Profit for the year |
|
10,000 |
|
83,818 |
|
93,818 |
|
|
|
|
|
|
|
|
|
Balance at 31 December 2014 |
100,000 |
225,000 |
0 |
209,193 |
1,000 |
535,193 |
|
|
|
|
|
|
|
|
|
Balance at 1 January 2015 |
100,000 |
225,000 |
0 |
209,193 |
1,000 |
535,193 |
|
|
|
|
|
|
|
|
|
Equity Shares issued net of issue costs |
20,000 |
|
|
|
5,000 |
25,000 |
|
|
|
|
|
|
|
|
|
Profit for the year |
|
|
|
1,005,772 |
|
1,005,772 |
|
|
|
|
|
|
|
|
|
Equity dividends paid (see note XX) |
|
|
|
(9,900) |
|
(10,000) |
|
|
|
|
|
|
|
|
|
Capitalisation of shares |
1,000 |
|
|
(1,000) |
– |
– |
|
|
|
|
|
|
|
|
|
Changes in ownership interests in subsidiaries which do not result in a loss of control |
|
|
|
|
|
– |
|
|
|
|
|
|
|
|
|
Buyback of own shares |
(1,000) |
|
1,000 |
(2,000) |
|
(1,000) |
|
|
|
|
|
|
|
|
|
Other Comprehensive Income |
|
|
(15,000) |
|
(15,000) |
(15,000) |
|
|
|
|
|
|
|
|
|
Balance at 31 December 2015 |
109,000 |
225,000 |
(14,000) |
1,214,965 |
(15,000) |
1,554,965 |
The below could be included in the notes to the financial statements
i) Revaluation reserve
The revaluation reserve arises as a result of the company’s policy of revaluing property, plant and equipment on a regular basis. During the year the depreciation net of the release of deferred tax on the uplift on the valuation was transferred from profit and loss reserves to the revaluation reserve. On inception of the revaluation reserve the reserve was recorded net of deferred tax.
ii) Cash flow hedge reserve
The cash flow hedge reserve is used to record transactions arising from the company’s cash flow hedging arrangements. There are expected to crystalise within the next 12 months as detailed in note X.
iii) Non-distributable reserve
This reserve arose on transition to FRS 102, where the entity applied the exemption in Section 35 of FRS 102 to deem a previous revaluation on property as deemed cost. The amount included in the reserve is net of deferred tax at the rate the asset is expected to be realised. During the year the depreciation net of the release of deferred tax on the uplift on the valuation was transferred from profit and loss reserves to the non-distributable reserve. On inception of the revaluation reserve the reserve was recorded net of deferred tax.
iv) Capital redemption reserve
The capital redemption reserve reflects the nominal value of shares bought back by the company. There was no activity on this reserve in the current year
v) Share premium
The share premium reflects the premium received on shares issued by the company. The increase arises due to the allotment of 10,000 shares above par during the year as detailed in note X.
vi) Capital development fund
The capital development fund is operated to accumulate funds to meet the cost of further development expenditure. It is envisaged that if the fund is not used for development, either ordinary shares will be issued in respect of amounts collected by the fund, or that contributions received will be refunded to the members. The issue of shares, refund of monies, or utilisation of the reserve for development purposes is at the discretion of the XXXXXX. No amount was allocated to the reserve during the year.
vii) Non-controlling interest
The non-controlling interest reserve reflects the proportion of the net assets owned by non-wholly owned subsidiaries. The movement in the year reflects the proportion of profits and other comprehensive income allocated to the non-controlling party.
Or
During the year the group acquired the remaining x% of XYZ Limited for XXX. As a result the non-controlling interest was derecognised and the balance was posted to profit and loss reserves in line with Section 22 of FRS 102.
viii) Other reserves
Other reserves relate to costs incurred on the issue of share based payments to employees which was required to be accounted for in equity under Section 26 of FRS 102.
The below example illustrates the requirements where a prior year adjustment or change of accounting policy arises. See section 10 for further details in relation to prior period adjustments and changes in accounting policy.
Example 2(a): Prior year adjustments or change in policy reflected in Statement of Changes in Equity
|
|
Equity Share |
Retained |
Total |
|
|
Capital |
Earnings |
Equity |
|
|
CU |
CU |
CU |
|
Balance at 1 January 2014 as previously reported |
100 |
63,600 |
63,600 |
|
|
|
|
|
|
Prior year adjustment – change in accounting policy (see note X) |
– |
– |
– |
|
|
|
|
|
|
Prior year adjustment – correction of material error (see note X) |
|
85,500 |
85,500 |
|
|
|
|
|
|
Balance at 1 January 2014 as restated |
100 |
149,100 |
149,100 |
|
Profit for the year as previously reported |
|
351,000 |
355,500 |
|
|
|
|
|
|
Prior year adjustment – change in accounting policy (see note X) |
– |
– |
– |
|
|
|
|
|
|
Prior year adjustment – correction of material error (see note X) |
|
4,500 |
4,500 |
|
|
|
|
|
|
Profit for the year as restated (see note X) |
|
355,500 |
355,500 |
|
|
|
|
|
|
Balance at 31 December 2014 |
100 |
504,600 |
504,700 |
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