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Section 6: Statement of Changes in Equity and Statement of Income and Retained Earnings (SOCE)

Summary

Section 6 deals with the requirements for the presentation of changes in an entity’s equity for a period.

What is new?

If the only changes in equity arise from profit or loss, dividends, changes in accounting policies or the correction of errors, a combined statement of income and retained earnings may be presented instead of the requirements detailed below.

What is different?

The Statement of Changes in Equity (the ‘SOCE’) is one of the primary financial statements, whereas previously there was a choice to disclose this as a note in the financial statements or on the face of the financial statements.

What are the key points?

The SOCE presents all changes in equity, including:

  • total comprehensive income for the period showing the split between owners of the parent and non-controlling interest;
  • the effects of changes in accounting policies and correction of errors; and
  • a reconciliation between the carrying amount at the beginning and end of the period of each component of equity for each period presented, separately disclosing changes resulting from:
  1. i) profit or loss;
  2. ii) other comprehensive income; and

iii) transactions with owners in their capacity as owners, e.g. dividends, treasury shares, changes in ownership interest in subsidiaries that do not result in loss of control.

What do accountants need to do?

Be aware of the changes in primary statements introduced by FRS 102 so that they prepare financial statements which are compliant with FRS 102 and advise clients of the difference.

What do companies need to do?

Be aware of the changes in primary statements introduced by FRS 102 so that they prepare financial statements which are compliant with FRS 102.