Section 5: Statement of Changes in Equity and Statement of Income and Retained Earnings (AASB1061_04-26)

This section sets out requirements for presenting the changes in an entity’s equity for a reporting period, either in a statement of changes in equity or, if the conditions specified in paragraph 5.4 are met and an entity so chooses, in a statement of income and retained earnings. It sets out the information to be presented in those statements and how to present it.

The statement of changes in equity presents an entity’s profit or loss for a reporting period, other comprehensive income for the period, the effects of changes in accounting policies and corrections of prior period errors, and the amounts of investments by, and distributions to, owners acting in their capacity as owners during the period.

The statement of changes in equity shall include the following information: 

(a) total comprehensive income for the period, showing separately the total amounts attributable to owners of the parent and to non-controlling interests; 

(b) for each component of equity, the effects of retrospective application or retrospective restatement recorded in accordance with Section 9; and 

(c) for each component of equity, a reconciliation between the carrying amount at the beginning and the end of the period, separately disclosing changes resulting from: 

(i) profit or loss; 

(ii) other comprehensive income; and 

(iii) amounts of contributions by owners acting in their capacity as owners, and changes in ownership interests in subsidiaries that do not result in a loss of control.

The statement of income and retained earnings presents an entity’s profit or loss and changes in retained earnings for a reporting period. Paragraph 2.20 permits an entity to present a statement of income and retained earnings in place of a statement(s) of financial performance and a statement of changes in equity if the only changes to its equity during the periods for which financial statements are presented arise from profit or loss, corrections of prior period errors and changes in accounting policy. Accordingly, an entity shall not present a statement of income and retained earnings if a transfer between classes of equity (eg between retained earnings and capital reserves) occurs, or items of other comprehensive income (eg a movement in asset revaluation surplus) are recorded, during the reporting period or any comparative period presented.

A change between presenting a statement of income and retained earnings and presenting both a statement(s) of financial performance and a statement of changes in equity is not a change in accounting policy.

An entity shall present in the statement of income and retained earnings, as a minimum, line items that present the amounts in paragraphs 4.6(a)–(e) for the period and the following: 

(a) retained earnings as at the beginning of the reporting period; 

(b) restatements of retained earnings for corrections of prior period errors; 

(c) restatements of retained earnings for changes in accounting policy; and 

(d) retained earnings as at the reporting date.