Skip to contentSkip to search
Sign inRegister

ACCA FR · Guided practice (Show me how)

Chapter 3: Presentation of Financial Statements (IFRS 18)

Statement of changes in equity: issues, dividends and a revaluation with a reserve transfer

Statement of changes in equity. Extracts from Ball's nominal ledger for the year ended 31 December 2017 are as follows ($000): profit for the year 421; dividend (98); balance 323. During the year the following important events took place: (i) properties were revalued by $105,000 increase; (ii) 200,000 equity shares of $1 were issued during the year at a 25c premium. The opening equity balances were as follows ($): issued capital 400,000; share premium 50,000; revaluation surplus 165,000; retained earnings 310,000; total 925,000. Prepare the statement of changes in equity for the year ended 31 December 2017 (work in $000, as the notes' answer does).

Revaluation and the SOCIE. The following extracts from the trial balance have been taken from the accounting records of Klopp Co as at 30 June 20X8 ($, credit balances): equity shares ($1) 2,400,000; share premium 800,000; retained earnings at 30 June 20X7 3,450,000. The following notes are relevant:

(i) On 1 January 20X8, Klopp Co issued 600,000 shares at their full market price of $1.80. The proceeds were credited to a suspense account.

(ii) The company's land and buildings were revalued on 1 July 20X7. The land had cost $500,000 and the buildings $5,000,000 on 1 July 20X2. The buildings were being depreciated over 50 years and the building's economic life remains unchanged. At 1 July 20X7, the land had a fair value of $600,000 and the buildings had a fair value of $5,400,000. Klopp Co wishes to make the annual transfer between the revaluation reserve and retained earnings.

(iii) Klopp Co declared the 20X7 final dividend of $0.05/share for all shares in issue on 30 June 20X7, on 9 July 20X7. An interim dividend for the year ended 30 June 20X8 of $0.04/share was declared on 4 April 20X8 for all shares in issue on 31 March 20X8.

(iv) Klopp Co's profit for the year is showing on the statement of profit or loss for the year ended 30 June 20X8 as $448,000.

Prepare a statement of changes in equity for Klopp Co for the year ended 30 June 20X8.

  1. Example 3: Ball

    Calculate Ball's closing share premium, retained earnings and total equity at 31 December 2017.

  2. Klopp Co: the movements

    Calculate Klopp Co's share premium arising on the issue, dividends, revaluation gain and reserve transfer for the year ended 30 June 20X8.

  3. Klopp Co: closing balances

    Calculate Klopp Co's retained earnings and total equity at 30 June 20X8.

Opening this exercise…