Statement of changes in equity

Statement of changes in equity is the fourth primary financial statement under IAS 1, reconciling each equity component's opening and closing balance through profit, dividends and share transactions.

ByHoang TruongUpdated July 5, 2026

FrameworkIAS 1

See it move

Loading infographic...

A waterfall bridges Ridgeline Outdoor's equity from its opening balance of €1,900,000 to its closing balance of €2,330,000. Net profit of €350,000 adds to equity, dividends of €120,000 paid to shareholders reduce it, and a €200,000 share issue during the year adds further, reconciling the movement shown in the statement of changes in equity.

Where it fits

SubjectFinancial AccountingCoreTopicThe Financial StatementsCore

The formula

LaTeX

\text{Closing equity} = \text{Opening equity} + \text{Profit} - \text{Dividends} \pm \text{Other equity transactions}

Variables

$E 0$: Opening equity balance (€)
$P$: Profit or total comprehensive income for the period (€)
$D$: Dividends declared (€)
$O E$: Other equity transactions, such as new share issues or buybacks (€)

Reconciles the opening and closing balance of equity, or of any single component of it, over a reporting period.

Check yourself

PracticeCORE

At the start of the year, a company's retained earnings stood at €900,000. During the year it earned net profit of €260,000 and declared dividends of €80,000. No other adjustments were made to retained earnings. What is the closing retained earnings balance?

Select an answer to check your understanding.