Chapter # 07

Statement of changes in Equity

IAS-01
 ICAP Question Bank
Question # 01 Page # 461:
The equity of SMS Ltd as on December 31, 2019 is as follows:

Rs. in million
Total equity at the beginning of the year:
- Share Capital (@ Rs. 10 fully paid ordinary shares) 3,000
- Share premium 1,900
- Retained earnings 4,500
Profit for the year 400
Dividends declared and paid (300)
Total equity at the end of the year 9,500
• The company made a bonus issue of 2 to 1.
Required:
The Statement of Changes in Equity of SMS Ltd for the year ended on December 31, 2019.
Question # 02 Page # 461 :
The following information pertains to draft financial statements of Pak Ocean Limited
(POL) for the year ended 31 December 2018.
2018
Shareholders' equity as at 1 January 2018 was as follows: Rs in million
Share capital (Rs. 100 each) 200
Retained earnings 45
Profit after tax 78
Other comprehensive income (gain on revaluation) 12
Incremental depreciation on revaluation of property, plant and equipment 1.5
• On 30 November 2018, POL issued 25% right shares to its ordinary shareholders at
Rs. 120 per share.
• Cash dividend @ 18% for the year ending 2017 was declared in January 2018
• Bonus issue declared during the year ended 31 December 2018:
→ Interim(declared with half yearly accounts) 10%
→ Final 25%
Required:
Prepare the statement of changes in equity for the year ended December 31, 2018 for
Pak Ocean Limited.
Question # 03 Page # 462:
For the purpose of preparation of statement of changes in equity for the year ended 31 December 2017,
Daffodil Limited (DL) has extracted the following information:
2017 2016 2015
Draft Audited Audited
-------------- Rs. in million -------------
Net profit 650 318 214
Transfer to general reserves 112 - 141
Final cash dividend - - 7.5%
Additional information:
(i) Details of share issues:
• 25% right shares were issued on 1 May 2016 at Rs.18 per share. The market price per
share immediately before the entitlement date was also Rs.18 per share.
• A bonus issue of 10% was made on 1 April 2017 as final dividend for 2016.
• 50 million right shares were issued on 1 July 2017 at Rs.15 per share. The market price
per share immediately before the entitlement date was Rs.25 per share.
• A bonus issue of 15% was made on 1 September 2017 as interim dividend.
(ii) Share capital and reserves as at 31 December:
2015 2014 Required:
----- Rs. in million ----- Prepare DL’s statement of changes in equity
Ordinary share capital (Rs. 10 each) 1,600 1,600
for the year ended 31 December 2017.
General reserves 1,850 1,709
Retained earnings 1,430 1,302 (Ignore taxation)
Question # 04 Page # 462:
MK corporation Limited, an entity listed in Pakistan Stock Exchange is in the business of manufacturing and sale of yarn
products. Company year-end is December. Below is the relevant information given:
Opening balances as at January 01, 2018 Description Rs.
Following events have taken place in year 2018 and 2019: Opening Share Capital (at par value of Rs. 10 per share) 25,000,000
1. On March 31, 2018, Company issued right shares Share Premium 7,500,000
for Rs. 20 per share. Right shares were issued in the Opening General Reserves 750,000
proportion of 1 right share against 5 ordinary shares Opening RE 18,250,000
held. Revaluation Surplus 1,500,000
2. Board of Directors of the Company approved Interim dividend of Rs.2.25 per share for the half year ended June 30, 2018.
3. Annual profit for the year ended December 31, 2018 is Rs.10,250,000.
4. The Board of Directors of the Company recommended annual dividend of Rs.4.25 per share on February 15, 2019, which
was duly approved by the Shareholders on March 21, 2019.
5. The Board of Directors approved Bonus Shares of 20% of the Outstanding shares on June 30, 2019 which were duly credited
in Shareholders account on August 31, 2019.
6. Board of Directors of the Company approved Interim dividend of Rs.1.25 per share for the third quarter ended September
30, 2019.
7. Annual profit for the year ended December 31, 2019 is Rs.12,500,000.
8. The Board of Directors of the Company recommended annual dividend of Rs. 5 per share on February 15, 2020, which was
duly approved by the Shareholders on March 21, 2020.
9. The Company has a policy to transfer 5% of the Annual Profit to General Reserves.
10. Company revalued Fixed assets on December 31, 2017 resulting in Revaluation Surplus of Rs.1,500,000. Remaining useful
life of the Asset is 10 years and Company has a straight line method for Depreciation.
Required: Make Statement of Changes in Equity for the year ended December 31, 2018 and 2019. Ignore taxation impact if any.