Best examples of reconciliation in statement of changes in equity

Q: Q1. Can you give a quick example of reconciliation in statement of changes in equity for dividends only?

Yes. Suppose opening retained earnings are $100,000, net income is $30,000, and dividends are $10,000. The reconciliation for retained earnings would be: opening $100,000 + net income $30,000 – dividends $10,000 = closing $120,000. That small segment is one of the simplest examples of reconciliation in the statement of changes in equity.

Why examples of reconciliation in statement of changes in equity matter

The statement of changes in equity is where the story of ownership value lives. The income statement shows performance, the balance sheet shows a snapshot, but the equity reconciliation explains how you got from last year’s equity to this year’s.

Investors, lenders, and analysts increasingly pay attention to this statement, especially in 2024–2025 when:

Share buybacks are under more political and regulatory scrutiny in the U.S.
Startups and tech firms rely heavily on stock-based compensation.
Dividend policies are shifting as interest rates stay elevated.

That’s why good, concrete examples of reconciliation in statement of changes in equity are so helpful. They reveal whether value is being created through profits, diluted through new shares, or simply handed back to shareholders through dividends and buybacks.

Simple example of reconciliation in statement of changes in equity for a single-owner company

Start with the cleanest case: a small, single-owner corporation with only common stock and retained earnings. No fancy reserves, no other comprehensive income.

Assume this at January 1, 2025:

Common stock: $50,000
Retained earnings: $30,000
Total equity opening balance: $80,000

During 2025:

Owner invests an additional $20,000 in cash for new shares.
The company earns net income of $15,000.
The company pays a cash dividend of $5,000.

The reconciliation in the statement of changes in equity could look like this (simplified):

                      Common Stock   Retained Earnings   Total Equity
Opening balance           50,000             30,000          80,000
Owner contribution        20,000                  –          20,000
Net income                     –             15,000          15,000
Dividends                      –             (5,000)         (5,000)
Closing balance           70,000             40,000         110,000

This is one of the best examples of reconciliation in statement of changes in equity for teaching the basics:

The opening balance is clearly stated.
Every change is shown by component (stock vs. retained earnings).
The closing balance of $110,000 will match the equity section of the year-end balance sheet.

Even in this simple example of reconciliation, you can see how profits and distributions interact. The net income adds $15,000 to equity; the dividend subtracts $5,000, so retained earnings rise by $10,000 overall.

Real examples of reconciliation in statement of changes in equity for a public company

Public companies add layers: share-based payments, other comprehensive income (OCI), and multiple share classes. If you want real examples of reconciliation in statement of changes in equity, look at:

U.S. SEC filings on EDGAR: sec.gov/edgar
IFRS filers’ annual reports on investor relations pages

Pull up any large U.S. public company 10-K and you’ll see a table that reconciles:

Common stock and additional paid-in capital (APIC)
Retained earnings
Accumulated other comprehensive income (AOCI)
Treasury stock

A typical 2024-style reconciliation might include:

Opening balances for each equity component
Net income for the year
Other comprehensive income (for example, foreign currency translation adjustments, cash flow hedge gains/losses)
Cash dividends declared
Share repurchases (buybacks)
Stock-based compensation expense (equity-settled)
Shares issued under employee plans

These examples of reconciliation in statement of changes in equity show how modern capital markets activity flows through equity, not just through the income statement.

Now let’s build a more detailed, realistic scenario for 2025.

Opening balances at January 1, 2025:

Common stock + APIC: $200,000
Treasury stock: $(30,000)
Retained earnings: $120,000
AOCI: $(5,000)

Total opening equity: $285,000

Transactions during 2025:

Net income: $60,000
Other comprehensive income (unrealized gain on investments): $3,000
Cash dividends declared and paid: $20,000
New shares issued for cash: $40,000
Share buybacks: $25,000 (additional treasury stock)
Stock-based compensation (equity-settled): $8,000 (credited to APIC)

A condensed reconciliation in the statement of changes in equity:

                           CS+APIC   Treasury   Retained   AOCI    Total
Opening balance            200,000   (30,000)   120,000  (5,000) 285,000
Net income                       –         –     60,000      –    60,000
Other comprehensive income       –         –          –   3,000    3,000
Dividends                        –         –    (20,000)     –   (20,000)
Shares issued               40,000         –          –      –    40,000
Share buybacks                   –   (25,000)         –      –   (25,000)
Stock-based compensation     8,000         –          –      –     8,000
Closing balance            248,000   (55,000)   160,000  (2,000) 351,000

This is one of the best examples of how different corporate actions reconcile into equity:

Net income flows into retained earnings.
Dividends reduce retained earnings.
New shares and stock-based compensation increase CS+APIC.
Share buybacks increase the treasury stock debit balance, reducing total equity.
Other comprehensive income adjusts AOCI directly, bypassing the income statement.

The reconciliation explains exactly how total equity climbed from $285,000 to $351,000.

Examples include start-up equity moves and stock-based compensation

Modern start-ups and tech companies rely heavily on equity compensation and frequent funding rounds. Some of the most instructive examples of reconciliation in statement of changes in equity come from these high-growth businesses.

Imagine a SaaS startup in 2025 with these opening balances:

Common stock + APIC: $1,000,000
Retained earnings (accumulated deficit): $(300,000)

Total opening equity: $700,000

During the year:

Series B funding: investors inject $2,500,000 in exchange for preferred shares.
Net loss: $(250,000).
Stock options granted and vested: $150,000 of stock-based compensation.
No dividends.

The reconciliation might look like:

                           CS+APIC   Retained Earnings   Total Equity
Opening balance           1,000,000        (300,000)        700,000
Series B share issue      2,500,000              –        2,500,000
Stock-based compensation    150,000              –          150,000
Net loss                         –        (250,000)        (250,000)
Closing balance           3,650,000        (550,000)      3,100,000

This example of reconciliation underscores a point analysts care about in 2024–2025: equity can grow rapidly through capital injections and share-based pay, even while the business is loss-making. The reconciliation makes that trade-off transparent.

Examples of reconciliation in statement of changes in equity under IFRS vs. U.S. GAAP

IFRS and U.S. GAAP both require a reconciliation of equity, but presentation styles differ.

Under IFRS, IAS 1 requires a statement of changes in equity that:

Shows total comprehensive income for the period.
Shows transactions with owners in their capacity as owners (like dividends, share issues, and buybacks).
Reconciles each component of equity from opening to closing balance.

You can see real examples in IFRS financial statements via the IFRS Foundation resources: ifrs.org.

Under U.S. GAAP, the reconciliation can be presented as a separate statement or within the notes, but the logic is the same: explain movements in each equity account. The FASB outlines these requirements in its codification, which you can explore at fasb.org.

These different frameworks still produce very comparable examples of reconciliation in statement of changes in equity: both walk the reader from opening to closing equity, line by line.

Sector-specific examples: banks, insurers, and manufacturers

Some of the best examples of reconciliation in statement of changes in equity come from industries with complex capital structures.

Banking and financial services

Banks often show:

Regulatory capital instruments (like additional Tier 1 securities).
Large AOCI balances from available-for-sale securities.
Foreign currency translation adjustments from global operations.

A bank’s reconciliation might include:

Issuance or redemption of preferred shares.
Reclassification of OCI to profit or loss when securities are sold.
Changes in reserves for credit losses that affect retained earnings.

Because bank capital is so tightly regulated, investors and regulators study these real examples of equity reconciliation to understand capital strength.

Insurance companies

Insurers may show:

Adjustments to insurance contract liabilities that hit OCI.
Revaluations of investment portfolios under fair value rules.
Dividends from subsidiaries that affect the parent’s retained earnings.

The reconciliation exposes how market volatility and actuarial assumptions are impacting equity over time.

Manufacturing and industrials

Manufacturers often show examples of reconciliation that highlight:

Pension plan remeasurements in OCI.
Foreign currency translation for overseas plants.
Share buybacks timed around cash flow cycles.

These sector-specific examples include nuances that general templates miss, but the underlying reconciliation logic is identical.

Example of reconciliation when there is a prior-period adjustment

Not every year is clean. Sometimes errors are discovered, or accounting policies change retrospectively. In those cases, the statement of changes in equity must reconcile not just current-year activity, but also restatements of opening balances.

Assume:

Opening retained earnings (reported previously): $500,000.
During 2025, an error from 2023 is found: depreciation was understated by $40,000.
The company corrects this as a prior-period adjustment.

In the reconciliation, you might see something like this for retained earnings:

Retained earnings, opening balance (as previously reported)      500,000
Prior-period adjustment: correction of depreciation error        (40,000)
Retained earnings, opening balance (restated)                    460,000
Net income for 2025                                              90,000
Dividends                                                       (25,000)
Retained earnings, closing balance                              525,000

This example of reconciliation shows how prior-period adjustments are handled transparently. Analysts can track the impact of the correction separately from current-year performance.

For guidance on error corrections and restatements, the U.S. SEC staff bulletins and FASB resources at sec.gov and fasb.org are useful references.

How to read these examples like an analyst

When you look at examples of reconciliation in statement of changes in equity, there are a few questions that separate casual readers from serious analysts:

Is equity growth driven by profits or by new capital (share issues, stock-based pay)?
Are dividends and buybacks funded from sustainable earnings, or are they eroding equity?
How volatile is AOCI, and what risks does that signal (interest rate risk, FX risk, pension risk)?
Are there large one-off items, like prior-period adjustments or big write-downs, that change the trend in retained earnings?

By comparing several real examples from different years or companies, you start to see patterns: conservative capital policies vs. aggressive ones, steady compounding vs. equity churn.

FAQ: examples of reconciliation in statement of changes in equity

Q1. Can you give a quick example of reconciliation in statement of changes in equity for dividends only?
Yes. Suppose opening retained earnings are $100,000, net income is $30,000, and dividends are $10,000. The reconciliation for retained earnings would be: opening $100,000 + net income $30,000 – dividends $10,000 = closing $120,000. That small segment is one of the simplest examples of reconciliation in the statement of changes in equity.

Q2. What are common items that appear in real examples of reconciliation in statement of changes in equity?
Common items include net income or loss, other comprehensive income, dividends, share issues, share buybacks, stock-based compensation, and prior-period adjustments. In some sectors, you also see movements in revaluation reserves or hedging reserves.

Q3. Where can I find the best examples of reconciliation in statement of changes in equity from real companies?
Look at annual reports and 10-K filings on the U.S. SEC’s EDGAR database at sec.gov/edgar. Many large companies present detailed equity reconciliations that you can study and even adapt as templates.

Q4. Do private companies have to present a statement of changes in equity with this level of detail?
It depends on the accounting framework and jurisdiction. Many private companies prepare a full statement of changes in equity because lenders or investors expect it, even if local rules allow a simplified format. The reconciliation logic is the same; only the level of disclosure may differ.

Q5. How do stock-based compensation plans show up in examples of reconciliation in statement of changes in equity?
Equity-settled stock-based compensation is typically recorded as an expense in the income statement, with a corresponding credit to additional paid-in capital or a similar equity account. In the reconciliation, you’ll see a line for stock-based compensation increasing equity, even though it reduces net income.

If you want to sharpen your understanding further, compare the statement of changes in equity from two or three companies in the same industry. Treat those real examples as a lab: trace how each line item reconciles equity and ask what that says about management’s capital strategy.