Equity capital is the total value of the organization's funds owned by it and used to form some of the assets. Equity is the portion of an enterprise's capital that remains at its disposal after deducting all liabilities.
Instructions
Step 1
You can easily determine the amount of equity capital from the balance sheet. It includes charter capital, additional capital, reserve capital, as well as retained earnings and special purpose funds. All these values can be found in the III section of the balance sheet "Capital and reserves".
Step 2
Let's consider in more detail the formation of each article in this section. The authorized capital (line 410 of the balance sheet) is the amount invested by the founders in the enterprise. It is stipulated in the constituent documents of the organization. The authorized capital can only be changed after making the appropriate entries in the constituent documents. Equity should also include line 411 "Own shares redeemed from shareholders" if the organization redeemed securities from shareholders.
Step 3
Additional capital (line 420) is a part of the company's equity capital, which includes the amounts contributed by the founders in excess of the authorized capital. Remember that the amount of share premium of the joint-stock company, the amount of revaluation of the organization's non-current assets, as well as part of retained earnings remaining at its disposal can be reflected as additional capital.
Step 4
Reserve capital (line 430) is a part of equity capital that is allocated from the company's profits to cover possible losses and losses. Please note that the reserve capital is divided into reserves formed in accordance with the legislation (line 431) and reserves formed in accordance with the constituent documents (line 432).
Step 5
Remember that the main source of accumulation of property of the enterprise is retained earnings (line 470). It is equal to the difference between the financial result for the reporting period and the amount of taxes, as well as other payments made from profit. It also includes the balances of special purpose funds created in the organization, which are not shown in the balance sheet as a separate line.
