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Week 11: Equity, Income and Expenses (Equity (Statement of Changes in…
Week 11: Equity, Income and Expenses
Equity
Equity = Asset - Liability
Statement of Comprehensive Income: the change in equity during a period
Total comprehensive income = Normal profit/ loss +
other comprehensive income
Statement of Changes in Equity
Retained Earnings
Reserves (retained earnings transfer to reserve account instead of dividends)
Share Capital
Dividends (cash/ property/ shares)
Final dividend: determined at the end of year
Interim dividend: dividend paid during the year
Income
Conceptual Framework - Para 70
Gains
one off transactions (i.e: selling land)
usually a net amount
Revenue
sales, fees, interest, dividends, rent, royalties
arises from ordinary activities
Expense
Expense
Loss
Research and Development
Research: uncertain that if the process will successful or not
(recorded as an expense)
Development: more likely to be successful (recorded as an asset)
Exploration can be recognized as expense or asset (must see the ppt for more details)
Characteristics of a corporation (p.591)