Chapter 9
Accounting for Equity
In This Chapter
Dishing out share capital
Paying more than shares are worth
Getting savvy with share-based payments
Rifling through retained earnings
Handling the revaluation reserve
Equity is the residual value left over when you take all other costs into consideration (a bit like what’s left after you work out your bills for the month and take them off your monthly salary). Equity, in the context of companies, works on exactly the same principle: from the viewpoint of a company, equity is the shareholders’ funds.
Under IFRS, the statement of financial position has a section dedicated to equity, also known as shareholders’ funds. In this chapter, I examine the various components of the equity section. The equity section of a company’s statement of financial position often comprises:
Share capital
Share premium account
Revaluation reserve
Retained ...
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