101 Concepts for the Level I Exam
Concept 47: Components of Shareholders’ Equity
The six components of equity are:
- Contributed capital: Total amount paid in by common and preferred shareholders.
- Treasury shares: These are shares that have been repurchased by the company, but not yet retired.
- Retained earnings: Cumulative income of firm since inception that has not been distributed as dividends.
- Accumulated other comprehensive income: These include items which lead to changes in equity but are not part of income statement or from issuing stock, reacquiring stock, and paying dividends.
- Non-controlling interest (minority interest): It is the portion of a subsidiary not owned by parent company. For example, if a firm owns 80% of a subsidiary, then it will report 20% of net assets of the subsidiary as minority interest.
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