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3.13 Concept Map - Shareholders' Equity Part I

Shareholders' equity includes all capital supplied to a firm plus retained earnings. It is comprised of issued share capital, retained earnings, and additional equity components according to accounting standards. In calculating shareholders' equity, factors that are included are the number of shares, extra paid-in capital, retained earnings, and treasury stock. Factors excluded are minority interests if subsidiaries are consolidated. Equity is initially allocated between liability and equity components and subsequently measured along various points of intervention outcomes. Impairment of capital affects the balance sheet when equity is worth less than par value, and derecognition removes assets or liabilities from the balance sheet.

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Shawn Cassidy F. Garcia
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249 views2 pages

3.13 Concept Map - Shareholders' Equity Part I

Shareholders' equity includes all capital supplied to a firm plus retained earnings. It is comprised of issued share capital, retained earnings, and additional equity components according to accounting standards. In calculating shareholders' equity, factors that are included are the number of shares, extra paid-in capital, retained earnings, and treasury stock. Factors excluded are minority interests if subsidiaries are consolidated. Equity is initially allocated between liability and equity components and subsequently measured along various points of intervention outcomes. Impairment of capital affects the balance sheet when equity is worth less than par value, and derecognition removes assets or liabilities from the balance sheet.

Uploaded by

Shawn Cassidy F. Garcia
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Garcia, Shamae Avery F.

Concept Map of SHAREHOLDERS’ EQUITY

Account Shareholders’ Equity Part 1

Standard(s) PAS / PFRS __ All capital supplied to the firm plus


retained earnings make up shareholders' equity.
According to International Accounting Standards
(IAS) 1, shareholders' interests can be divided
into three categories: issued share capital,
retained earnings, and additional equity
components.
Include Number of shares, extra paid-in capital, retained
earnings, and treasury stock are all included in
the shareholders' equity computation. If a
company's shareholders' equity is positive, it
means it has enough assets to cover its liabilities;
if it's negative, it means it has more liabilities
than assets.
Exclude If the financial situation of subsidiaries is included
in the balance sheet, the recorded amount of
minority interests must also be omitted from the
computation. The common stock, preferred
stock, retained profits, and treasury stock
accounts are commonly regarded to constitute
the shareholders' funds.
Initial Recognition The initial carrying amount of a compound
financial instrument is required to be allocated to
its equity and liability components, the equity
component is assigned the residual amount after
deducting from the fair value of the instrument
as a whole the amount separately determined for
the liability component.
Subsequent Measurement Equity should be measured for each component
along an intervention: development,
implementation, quality, and outcome. Equity
policy scholarship has attempted to qualify what
and how disparities arise along different points of
exchange between an intervention and the
population being served.
Impairment Similar to the impairment of an asset, which is a
permanent reduction in the value of a company's
asset, a company's capital can also become
impaired. Impaired capital affects a company's
balance sheet when stockholders' equity is worth
less than the par value of the stock.
Derecognition Derecognition refers to the removal of an asset
or liability (or a portion thereof) from an entity's
balance sheet. Derecognition questions can arise
with respect to all types of assets and liabilities.
This project focuses on financial instruments. If
shareholders' equity is positive, a company has
enough assets to pay its liabilities; if it's negative,
a company's liabilities surpass its assets.
Special Considerations Four components that are included in the
shareholders' equity calculation are outstanding
shares, additional paid-in capital, retained
earnings, and treasury stock.

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