Components of the Statement of Changes in Equity

Steps:

• Identify the purpose: tracks owner transactions, profits/losses, and reserves movements per IAS 1.
• List key items: share capital changes (e.g., rights issues), distributions (e.g., dividends paid), and net profit/loss.
• Exclude non-equity items: interest expenses like debenture interest belong in the income statement.
• Evaluate options: match against equity-specific transactions only.

Why C is correct:

• IAS 1 requires the statement to show profit for the year (retained earnings), dividend paid (owner distributions), and rights issue (capital transactions with owners).

Why the others are wrong:

• A: Debenture interest paid is an income statement expense, not an equity change.
• B: Dividend proposed creates a liability but does not yet reduce equity; only paid dividends do.
• D: Debenture interest is not an equity transaction; it affects profit but is not shown directly here.

Final answer: C