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5.3 Presentation of changes in stockholders’ equity
Publication date: 31 May 2022
us Financial statement presentation guide
ASC 505-10-50-2 requires a reporting entity to disclose changes in each account that comprise its equity when both a balance sheet and income statement are presented. This disclosure may take the form of a separate statement or it may be in the footnotes.
While footnote disclosure is permitted, the most common presentation is as a separate statement of changes in stockholders' equity. Reporting entities typically present the information about changes in stockholders' equity in a columnar format, but it is not required.
Figure FSP 5-1 shows an example statement of changes in stockholders’ equity in columnar format.
Figure FSP 5-1
Example consolidated statement of changes in stockholders’ equity
Example consolidated statement of changes in stockholders’ equity
FSP Corp Consolidated statement of changes in stockholders’ equity For the year ended December 31, 20X2 (in millions $, except per share data) |
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Common shares
|
Amnt
|
Preferred shares
|
Amnt
|
APIC
|
Retained earnings
|
AOCI
|
Total
FSP Corp stockholders' equity |
Noncontrolling interests
|
Total equity
|
|
Balance at December 31, 20X1
|
xx
|
$xx
|
xx
|
$xx
|
$xx
|
$xx
|
$xx
|
$xx
|
$xx
|
$xx
|
Net income
|
xx
|
xx
|
xx
|
xx
|
||||||
Other comprehensive income, net
|
xx
|
xx
|
xx
|
xx
|
||||||
Stock-based compensation
|
xx
|
xx
|
xx
|
xx
|
xx
|
|||||
Common stock issued
|
xx
|
xx
|
xx
|
xx
|
xx
|
|||||
Retirement of common shares
|
(xx)
|
(xx)
|
(xx)
|
(xx)
|
(xx)
|
(xx)
|
||||
Cash dividends declared ($x.xx per share)
|
(xx)
|
(xx)
|
(xx)
|
|||||||
Stock dividends declared
|
xx
|
xx
|
xx
|
(xx)
|
||||||
Conversion of preferred shares into common shares
|
xx
|
xx
|
(xx)
|
(xx)
|
||||||
Purchase of shares from noncontrolling interests
|
(xx)
|
xx
|
(xx)
|
(xx)
|
(xx)
|
|||||
Balance at December 31, 20X2
|
xx
|
$xx
|
xx
|
$xx
|
$xx
|
$xx
|
$xx
|
$xx
|
$xx
|
$xx
|
See Notes to Consolidated Financial Statements
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As illustrated in Figure FSP 5-1, if there is more than one item that comprises other comprehensive income, the items may be presented net on the statement of stockholders’ equity (the gross amounts of the items would be presented on the statement of comprehensive income). However, reporting entities are not prohibited from presenting the gross amounts of other comprehensive income in the statement of stockholders’ equity as well. Refer to FSP 4 for presentation of comprehensive income.
For SEC registrants, S-X 3-04 calls for disclosure of dividends per share and in the aggregate for each class of shares.
5.3.1 Noncontrolling interests
The statement of changes in stockholders’ equity should distinguish equity attributable to the parent from equity attributable to noncontrolling interests. As discussed in ASC 810-10-50-1A(c), it should present the noncontrolling interests’ portion of each component of stockholders’ equity.
Either in the consolidated statement of changes in equity, if presented, or in the notes to consolidated financial statements, a reconciliation at the beginning and the end of the period of the carrying amount of total equity (net assets), equity (net assets) attributable to the parent, and equity (net assets) attributable to the noncontrolling interest. That reconciliation shall separately disclose all of the following:
- Net income
- Transactions with owners acting in their capacity as owners, showing separately contributions from and distributions to owners
- Each component of other comprehensive income.
ASC 810-10-50-1A(d) requires reporting entities to disclose in the footnotes a separate schedule that shows the effects of any changes in a parent's ownership interest in a subsidiary on the equity attributable to the parent. The schedule is only required in periods when a parent's ownership interest in a subsidiary changes. ASC 810-10-55-4M provides an illustration of this disclosure.
Question FSP 5-1
Should redeemable noncontrolling interests classified as mezzanine equity be included in the equity reconciliation required by ASC 810-10-50-1A(c)?
Should redeemable noncontrolling interests classified as mezzanine equity be included in the equity reconciliation required by ASC 810-10-50-1A(c)?
PwC response
We believe a reporting entity should follow the SEC guidance in S-X 5-02(27)(c), which applies to redeemable preferred stock, when disclosing changes in redeemable noncontrolling interests. That guidance requires an SEC registrant to include a rollforward of redeemable preferred stock in either the statement of changes in stockholders' equity or in the footnotes. If the reporting entity includes the rollforward of redeemable preferred stock in the statement of changes in stockholders' equity, it should consider an appropriate title of the statement, since it will include amounts not included in stockholders' equity. S-X 5-02 (27) prohibits totaling preferred stocks subject to mandatory redemption requirements or whose redemption is outside the control of the issuer with equity-classified instruments.
Refer to FSP 5.6.3 for further information on presentation of redeemable preferred stock.
1 The purchase of additional subsidiary shares once control is obtained by the Parent Company is accounted for as an equity transaction, and no gain or loss is recognized. The components of accumulated other comprehensive income are proportionately reallocated from the noncontrolling interest to the Parent.
PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
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