Statement of Owner Equity
Gerry Schwab and Sherrill Nott
Statement of Owner Equity
Purpose:
To reconcile the owner equity amount
stated at the beginning of the time
period, with the owner equity amount
determined at the end of the time
period.
OWNER Equity
• Term used to describe value of the
business after the total claims of creditors
are subtracted from the value of the
assets.
• The term “owner equity” refers only to a
business and this statement includes no
information for an individual person.
Net Worth
• The term “net worth” is used to describe
value of business plus personal valuation
after the total claims of creditors are
subtracted from the value of assets.
• The term “net worth” refers to a statement
for an individual person or a statement for
a business which also contains data for an
individual person.
Statement of Owner Equity
• Components should include:
1. Beginning owner equity
2. Plus net income amount
3. Minus owner withdrawals
4. Plus contributions received by business
5. Minus contributions distributed to others
6. Equals Change in Retained
Earnings/Contributed Capital
7. Ending Owner Equity (Cost Value Basis)
Statement of Owner Equity
• Components should include:
7. Ending Owner Equity (Cost Value Basis)
8. Adjustment for change in Asset Values
(Ending market value - cost value) (Beginning market value - cost value)
from beginning to end of time period
and adjustment for change in Deferred Debt
(+Beginning - Ending Deferred Liabilities)
9. Equals change in market valuation equity
10. Ending Owner Equity (Market Value Basis)
Statement of Owner Equity
1. Owner Equity,
Beginning of Period
2a. Net Farm
Income/Loss
2b. Non-farm Income
Contributed to Farm
Business
3a. Withdrawals for
Family Living Expenses ________
3b. - Income and Social
________
Security Taxes
3. Owner Withdrawals
(net)
= Total Change in
Retained Earnings
4. + Other Capital
Contributions/Gifts/
Inheritance received
5. - Other Capital
Distributions/Dividends/
Gifts Made
6. = Total Change in
Contributed Capital &
Retained Earnings
7. Ending Owner Equity
(cost value basis)
Market
Cost
__________
__________
_____________
______________
_____________
______________
_________
________
________
___________
______________
Statement of Owner Equity
8. Change in Excess of Market Value over Cost Basis of Marketable Securities and
Farm Capital Assets
Beg.
-
End
+
Change
Market
Cost
Intermediate Assets
_________
__________
_________
_________
___N.A.
Real Estate
_________
__________
_________
_________
___N.A.
Market
Cost
Beg.
+
End
-
Change
Change in:
Deferred Liabilities
_________
_________
_________
_________
___N.A.
9. Total Change in
Valuation Equity
_________
_________
_________
_________
___N.A.
_________
_________
___N.A.
10. Owner Equity, End
of Period
Statement of Owner Equity (net worth)
Cash Grain Farm -- Jan. to Dec. 2000
1. Owner Equity,
Beginning of Period
2. Net Farm Income/Loss
97,897
3. Non-farm Income
Contributed to Farm
Business
______
3a. Withdrawals for Family
Living Expenses
(28,389)
3b. - Income and Social
Security Taxes
(24,280)
3. Owner Withdrawals (net)
5. - Other Capital
Distributions/Dividends/Gift
s Made
6. Total Change in
Contributed Capital &
Retained Earnings
7. Ending Owner Equity
(cost value basis)
Cost
833,030
385,250
45,228
45,228
- 1,300
- 1,300
(52,669)
= Total Change in Retained
Earnings (Line 2 – Line 3)
4. + Other Capital
Contributions/Gifts/
Inheritance received
Market
________
(1,300)
429,178
Statement of Owner Equity
8. Change in Excess of Market Value over Cost Basis of Marketable Securities and Farm
Capital Assets
Beg.
-
End
+
Change
Intermediate Assets
202,750
236,053
+33,303
Real Estate
725,000
725,000
0.0
Beg.
+
End
-
Change
479,970
508,635
-28,665
Market
Cost
Market
Cost
9. Total Change in
Valuation Equity
+ 4,638
N/A
10. Owner Equity, End
of Period
$ 881,596
Change in:
Deferred Liabilities
$ 429,178
Statement of Owner Equity -- Summary
• Can determine CHANGE in Owner Equity
from beginning to end of time period
• Components of change are:
1 Retained earnings from profit
2 Contributed capital from sources outside the
business
3 Inflation/Deflation -- Change in Market Values