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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.