6. Statement of Changes in Equity

Question 1

True or False:

Statement of Changes in Equity contains the following:

(1) Net income or loss for the period

(2) Each item of income and expense for the period that is recognized directly in equity and the total of these items as required by the PAS.

(3) Total income and expenses for the period showing separately the total amounts attributable to equity holders of the parent and to majority
interest

(4) For each component of equity, the effect of changes in accounting policies and corrections of errors

Answer 1

(1) True
(2) True
(3) False ; minority
(4) True

Question 2

The residual interest in the assets of the entity after deducting all its liabilities

Answer 2

Equity

Question 3

The equity in the shareholders in the statement of financial position may be sub-classified as:

Answer 3

(a) Share capital
(b) Retained Earnings
(c) Reserves

Question 4

Funds contributed by the shareholders. (ordinary share capital and preference share capital)

Answer 4

Share Capital

Question 5

True or False:

Preference shareholders do not have preference over ordinary shareholders on the dividends and net asset of an entity in the event of liquidation.

Answer 5

False ; have preference over ordinary shareholders

Question 6

True or False:

The line items share capital includes subscriptions made by shareholders net of subscription receivables.

Answer 6

True

Question 7

Line item in the equity representing accumulated net income (loss), errors of prior periods, dividends distribution, changes in accounting policy and equity adjustments other than those arising from contributions from shareholders.

Answer 7

Retained Earnings

Question 8

For Reserves, line items in the equity section includes:

Answer 8

(1) Appropriation reserve
(2) Share premium
(3) Revaluation adjustment
(4) Foreign currency translation reserve

Question 9

Transfer of an amount from the retained earnings.

May be required by law in order to give the entity and its creditors and added measure of protection from the effects of losses, voluntary action of the management, or because of contractual obligations.

Answer 9

Appropriation Reserve

Question 10

Represent the excess amount contributed by the shareholders over the par value.

Answer 10

Share Premium

Question 11

is the minimum issue price of the shares

Answer 11

Par value

Question 12

Represents the excess of the depreciated replacement cost or sound value of the
revalued property, plant, and equipment over the book value (revaluation model).

Answer 12

Revaluation Adjustment

Question 13

Rises from the translation of financial elements or transaction in foreign currency into the functional currency of an entity (translation gain or loss)

Answer 13

Foreign Currency Translation Reserve

Question 14

True or False:

PAS 1 requires all items of income and expense recognized in a period to be included in income or loss unless another standard or an interpretation requires otherwise.

Answer 14

True

Question 15

PAS 1 requires the presentation of a statement of changes in equity that highlights an entity’s total income and expenses.

Answer 15

True

Question 16

An entity shall also present, either on the face of the statement of changes in equity or in the notes the following:

Answer 16

(1) Amount of transactions with equity holders

(2) Balance of retained earnings at the beginning of the period and at the balance sheet date, and the changes during the period

(3) Reconciliation between the carrying amount of each class or contributed equity and each reserve at the beginning and at the end of the period separately disclosing each change.