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4

   Statement of changes in equity 

IAS 1 requires an entity to provide a statement of changes in equity. The statement of changes in equity 

shows the movements in the entity's equity for the period.  

4.1 Statement of changes in equity 

The statement of profit or loss and other comprehensive income is a straightforward measure of the 

financial performance of the entity, in that it shows all items of income and expense recognised in a 

period. It is then necessary to link this result with the results of transactions with owners of the 

business, such as share issues and dividends. The statement making the link is the statement of 

changes in equity.  

The statement of changes in equity simply takes the equity section of the statement of financial position 

and shows the movements during the year. The bottom line shows the amounts for the current statement 

of financial position. As we saw above, the total comprehensive income for the year is split between the 

gains on revaluation of property, which is credited to the revaluation surplus, and the profit for the year, 

which is credited to retained earnings. 

An example statement of changes in equity is shown below.  

ABC CO 

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 20X2 

 

  

Share 

  

Share 

  

Revaluation 

  

Retained

 

 

  

capital 

  

premium

  

surplus 

  

earnings 

  

Total