What is Statement of Changes in Equity?
The statement of changes in equity is one of the five primary financial statements under IAS 1, reconciling opening and closing balances of each equity component and showing profit for the period, other comprehensive income, share issues, buybacks, and dividends.
How It Works
- Columns: share capital, share premium, reserves, retained earnings, OCI, non-controlling interest, total.
- Rows: opening balance, profit for the year, other comprehensive income, capital transactions, dividends, closing balance.
- Tied to the income statement via profit and to the balance sheet via closing equity.
- Discloses any retrospective restatements or prior-period error corrections.
Saudi Context
Saudi joint-stock companies must present this statement to comply with both IFRS and CMA disclosure rules. The legal reserve required by the Saudi Companies Law (10% of net profit until it reaches 30% of share capital) sits as a distinct reserve column on the statement and is non-distributable.
Example
A Saudi company opens the year with SAR 100,000,000 share capital and SAR 30,000,000 retained earnings, earns SAR 12,000,000, transfers SAR 1,200,000 to legal reserve, and pays SAR 6,000,000 in dividends. Closing retained earnings = 30,000,000 + 12,000,000 – 1,200,000 – 6,000,000 = SAR 34,800,000.