Define as the residual interest in the assets of

an entity after deducting all of the liabilities.

In other word, equity is equivalent of net

assets, meaning total assets minus total
liabilities.
 Share Capital

Share premium

Retained earnings
 It is a formal statement that shows the
movements in the elements or components of
the shareholders equity
1) Comprehensive income for the year.
2) For each component of equity, the effect of
changes in accounting policies and
corrections of errors.
3) For each component of equity, a
reconciliation between the carrying amount
at the beginning and end of the period,
separately disclosing from:
a) Profit or loss

b) Each item of other comprehensive income

c) Transaction with owners in the capacity as

owners showing separately distributions by
and distribution to owners
 Shows the affecting directly the retained
earnings of an entity.

Statement of retained earnings is now part of

the statement of changes in equity.
a) Net income or loss for the period
b) Prior period errors
c) Dividends declared and paid to
shareholders
d) Effect of change in accounting policy
e) Appropriation of retained earnings
a) Legal requirement

b) Contractual requirement

c) Entity policy