Consolidated Statement of Stockholder’s Equity
The most challenging concept in the class was figuring out what is a consolidated statement of the stockholder’s equity and its primary function. However, with the help of reading material from the internet, including the Google scholar and accounting journals, I realized that this concept was even easier as I had expected. The statement of the stake holder’s equity summarizes what takes place and happen to the organization’s equity for the reporting period (Yang, Poon, & Lee, 2018). This concept is also similar to the popularly used statement of cash flow, explaining to the stakeholders what happened to the company’s finance or cash. Besides, the statement of stockholder’s equity also elaborates on other material transactions which do not revolve around the assets, liabilities and earnings. For example, if the company just received $100 million in IPO proceeds, equity goes up. The SHE would also disclose the related new shares issued (for informational purposes). If the company repurchases publicly traded shares, that Treasury Stock transaction must be disclosed. In a way, it serves as a pseudo P&L for stock transactions (i.e. what happened during the period). These are, in most cases, pretty material events; one’s that investors ought to be aware of. Don't use plagiarised sources.Get your custom essay just from $11/page
Another interesting information I gathered is that the statement of stockholder’s equity is the least applied financial statements in the most organization based on the following reasons. Most people look at the P&L for earning and not the statement of stockholder’s equity. The stock transaction is typically the big event as such already known (Riccardi, 2016). However, this financial statement is essential to the company as it aids in calculating the difference between the company’s total assets and liabilities. This statement also helps the stockholder to note how their investment or equities are faring on given the company’s financial status or position. It allows the organization to decide the future of issuance of the stocks.
References
Riccardi, L. (2016). Accounting Standards for Business Enterprises No. 33—Consolidated Financial Statements. In China Accounting Standards (pp. 253-263). Springer, Singapore.
Yang, J. G., Poon, W. W., & Lee, J. Z. H. (2018). The Impact Of The New Consolidation Accounting Standards On Financial Statements. Business Journal for Entrepreneurs, 2018(4).