Stockholders\' equity

The stockholders' equity (or equities, equity capital English ) correspond to the stable resources of the company. They are composed of the Authorized capital , of the reserve S, the Report again and the result for the period ended.

" thus should not be confused; actif" and " capital propres". Indeed, they are the stockholders' equity and the debts of a company (in other words the entrepreneurial resources, joined together with the accounting balance sheet in the " category; passif") who finance his credit, immobilized so much (grounds, factories, non-voting shares.) that circulating (credits, stocks, transferable securities or banks).

To summarize, the stockholders' equity and the debts correspond to the entrepreneurial resources whereas the credit corresponds to the use of these resources.

The origin of these funds is primarily of two orders:

external Origin: contributions in capital realized by the shareholders in particular at the time of the formation of the company but also following increase or of reduction of capital during the life of the company,
internal Origin: benefit and losses accumulated of the company since its origin under deduction of the distributed benefit - dividends.

The whole of these funds corresponds to the net equity of the company.

However, the stockholders' equity includes/understands also certain provisions made up under the terms of purely tax provisions (tax regulated provisions, subsidies of investment,…) allowing a differed imposition. By doing this, these provisions have the character of reserves and are comparable with an available resource for the company.

Approaches countable

Definition of the old PCG

According to the PCG 1982, (p. I.21):

the stockholders' equity is determined by the difference between the countable expression, on the one hand, of the whole of the assets of the company and, on the other hand, the whole of the passive elements (passive external);
certain elements of the stockholders' equity are likely to be strikes of latent tax liabilities, others can generate latent tax credits;
from a functional point of view, the stockholders' equity takes part, jointly with the elements of the external liability, with the financing of the company.

Components of the stockholders' equity

According to the Chart of accounts (PCG), the stockholders' equity corresponds to the algebraic sum:

of the contributions: Authorized capital, premiums related to the capital,
of the variations of revaluation,
of the variations of equivalence,
of the Benefit S other than those for which a decision of distribution intervened: reserves, again credit carryforward, profit for the year,
of the losses: again debtor carryforward, loss of the exercise,
of the subsidies of investment,
of the Provision S regulated

(PCG, Article 434-1)

The stockholders' equity in group accounts

Principles of the consolidation

While reconsidering only very briefly the principle of the group accounts, the objective is to present the financial position of a Groupe of companies as if those formed only one legal entity.

It rests on a basic principle: it is a question of substituting for the accounting value of the titles held by the consolidating company the quota of the stockholders' equity of the subsidiary companies corresponding to these titles.

By doing this, the principle consists in periodically revaluing the value of the companies controlled by the consolidating company then to determine the share returning to the minority ones.

Consolidation and stockholders' equity

There does not exist any single definition of the stockholders' equity. Indeed, this concept can take a different significance according to the analyzes and of the countable reference frames used.

In the establishment of the group accounts, substantial differences exist, in particular to correct concepts directly related to the revenue duty or legal internal:

the subsidies of investment and the provisions regulated are integrated directly into the reserves of exemption from tax; the possible credits or tax liabilities afférant are entered there in deferred taxes.
In the same way, the variations of revaluation and the variations of equity method are removed. The evaluation of the tangible fixed assets and financial then follow the specific rules applicable to the group accounts (internal international standards IAS/IFRS or standards according to the cases).

Random links: