Stmt of Changes in Equity

Question 1

Background:

• 1. What are the 2 formats of reporting the OE Stmt?
• 2. What are the 5 accounts reported in the OE Stmt?
• 3. Other titles for the Stmt of Changes in Equity include Stmt of Changes in OE, OE Stmt, Stmt of Shareholders’ Equity, and Stmt of OE. Some firms prefer only to report a separate Stmt of RE and disclose the other changes in the n___.
• 4. The Stmt of Changes in OE expands the OE section of the Balance Sheet by listing all the changes in the ___, explaining how the beginning balance increased or decreased in deriving the ending balance. Reporting investments by owners and distributions to owners are important aspects of this disclosure.
• 5. SEC registrants report ___ years of OE Stmt, Income Stmt, Stmt of Comp Income and CF Stmt; and report ___ years of balance sheet. The current year OE stmt is shown ___ with OE stmts for the previous two years. Again, either the vertical or the horizontal format is used for presentation.
• 6. Stmt of Changes in OE is dated like the Income Stmt and CF Stmt - for a ___.
• NOTE
  
  • Is the OE Stmt a required financial stmt under the U.S. GAAP?
  • OE stmt ___ all of the beginning and ending balances in the OE accounts. For each OE account, the OE stmt shows the begining balance at the top then details all changes in the accounts during the year, leading down to an ending balance for each OE account.

Answer 1

• 1. vertical format; horizontal format.
• 2. 5 accounts reported in the OE Stmt:
     * contributed capital
     * additional PIC
     * RE
     * AOCI
     * treasury stock (contra OE account)
• 3. notes.
• 4. OE accounts.
• 5. 3 yrs; 2 yrs; comparatively.
• 6. period.
• NOTE
  
  • NO. While firms are required to report the changes in OE accounts, they are allowed to report it in the supplementary schedules or notes. However, large firms usually include the OE Stmt to meet this requirement. This does not mean that an OE Stmt is required, because firms are allowed to report changes in OE accounts using other methods.
  • reconciles.

Question 2

CPAexcel Flashcards:

• 1. Is the Stmt of Changes in Equity required under IFRS?
• 2. What do vertical format OE Stmt allow accountants to do?
• 3. In OE Stmt, how are accounts listed in the vertical format?
• 4. In OE Stmt, does AOCI have its own column in the vertical format?
• 5. How many years of OE Stmt must be reported by SEC registrants?

Answer 2

• 1. Yes, it is required. Recall that Stmt of Changes in Equity is not required under U.S. GAAP. Under U.S. GAAP, reporting of the changes in OE accounts is required, but it can be reported in OE stmt or supplementary schedule or notes.
• 2. Check accuracy by comparing total OE computed as (1) the sum of each transaction affecting OE and (2) the sum of individual OE account balances.
• 3. They are listed in separate columns.
• 4. Yes, because AOCI is an OE account.
• 5. 2 yrs of balance sheet and 3 yrs of other stmts.