05 Changes in Equity Flashcards
• Equity, is what the company “owes” to its owners. It represents the “internal
funding” of a company.
• The role of the statement of changes in equity is to provide a reconciliation of
opening and closing equity in a specific period.权益变动表的作用是提供一个特定时期的期初和期末权益的调节。
• It provides details of the various equity accounts that are impacted by the
period’s total comprehensive income.- - 它提供了受本期全面收入总额影响的各种权益账户的细节。
• It also provides information about the effects of transactions with owners in
their capacity as owners (distributions and capital contributions). - 它还提供了关于以业主身份与业主交易的影响的信息。他们作为所有者的身份进行的交易（分配和资本贡献）。
- The importance of this document derives from the creditors’ interest in knowing the changes that have occurred in the company’s equity, given the implications that these have on the guarantees the creditors received in exchange for their credit.
- For that reason, when a bank signs a loan with the company, it imposes some restrictions in the equity disposal.
- It consists of the initial and subsequent investments of the Owners, and the profits made since the beginning of the company.
- The main concepts in Equity for the vast majority of companies are the following:
- Capital
- Share Capital
- Share Premium (if shares are sold above its value)
- Reserves
- Retained earnings
- Profit for the Year
- Loss from previous years
- Grants & Donations
Contributed capital (or paid-in capital) which represents stockholders’ investment – common stock and additional paid in capital.
- Retained earnings are cumulative net income minus cumulative dividends since the formation of the company.
- Some unrealized gains/losses are reported in “other comprehensible income” and are not included in the net income.
Issuance of Stock
Purchases of Treasury Stock (reacquired stock): previously outstanding stock that is bought back from stockholders by the issuing company.
购买库房股票（重新获得的股票）：以前流通的股票，由发行公司从股东手中回购。
• Payment of Dividends:
