The statement of changes in equity is a reconciliation of the beginning and ending balances in a company's equity during a reporting period. It explains the changes in a company's share capital, accumulated reserves and retained earnings over the reporting period.
The report consists of two period sections, the first shows the details of the previous year and the below that shows the details of the present year.
The vertical line items consist of profits or losses from operations, dividends paid, issue or redemption of shares, revaluation reserve and any other items charged or credited to accumulated other comprehensive income. It also includes the non-controlling interest attributable to other individuals and organizations.
The horizontal line includes below details-
a) Issued share capital- Issued share capital refers to the total amount of the share capital that has been issued (allotted) to the shareholders.
This value can be recorded using Opening balance document, Bank/cash/cheque receipt/Payments.
- Opening balance should be recorded under accounting section- 'other section'
- To record increase of Issued share capital, receipt documents are used.
for example, create a Bank receipt document.
Choose 'Other' under transaction type and in the Cash flow item, choose Issued share capital (Cash flow item should be created as per the requirement)
In the payment details tab, choose the GL 'Issued share capital' as correspondence Gl account, as company name should be shareholder to whom it has been issued and equity movement item, helps to segregate the issued share capital into category i.e. new issued shares, dividend paid, contribution from shareholder.
Based on this equity movement items, the value appears in the report.
b) Treasury shares- refers to previously outstanding stock that has been bought back from stockholders by the issuing company. It is also known as reduction in equity stock. It creates a negative effect in the statement of changes in equity as they are purchased back, in the system. The user must create payment document in this case.
For example, Bank receipt document should be created with transaction type as Others and Cash flow item can be selected from the list available or new cash flow item can be created as needed.
In the payment details tab, add the Correspondence Gl account as Treasury share, shareholder should be added under company and equity movement, user must select 'Sale or Purchase of Treasury shares'
c) Share premium
Share premium refers to the additional amount that investors pay for shares over their nominal or face value.
For example, create bank receipt document. In the main tab, the transaction type should be Others and in the payment details tab, add Share premium as Correspondence GL Account, fill the shareholder under company field and in the Equity movement item, add the section where this data should display in the report.
d) Other Reserves- The general reserve is used from time to time to record transfer of profit from retained earnings for appropriation purposes.
e) Retained earning-
Retained earnings are a portion of a company's profit that is held or retained from net income at the end of a reporting period and saved for future use as shareholder's equity. It is net income after deducting dividend.
Please refer the manual for more details how to enter the retained earnings. (Retained Earnings Accrual on Capital Reserve)
f) Non- Controlling interest- It is the portion of a subsidiary corporation's stock that is not owned by the parent corporation.