Statement of changes in owner’s equity is something you’d prepare rarely, and if required, once a year when you’re preparing your Annual Report, at least.
An entity’s statement of changes in owner’s equity is a statement which shows movements by components within the equity for the determined period. It takes the brought forward balances and line by line shows the impact of each change to the component of an equity account. As such, a following schedule is formed. Note that all figures are merely for illustrative purposes.
|Share capital||Share premium||Other reserves||Retained earnings||Total|
|Brought forward balance||2,000||12,000||60,000||15,050||89,050|
|Contribution in to share capital||500||1,000||0||0||1,500|
|Profit (loss) for the period||0||0||0||7,050||7,050|
|Carried forward balance||2,500||13,000||60,000||22,100||97,600|
As you can see we had two types of changes happen to our equity accounts – we increased our share capital, share premium and earned a profit that we left to increase the retained earnings. Each change is on its own line item and as such reflects its impact on specific items of equity only.