Net Equity Components In Financial Statements

The determination of the net equity components has been the object of doubts by certain companies at the time they are preparing their Balance Sheets.

Prior to the enactment of Law no. 11 638/07, article 178 of Law no. 6 404/76 (Business Corporation Act) established that the net equity was divided into the following components: "capital stock, capital reserves, revaluation reserves, profit reserves and accrued profits or earnings."

However, that wording was amended by Law no. 11 638/07 and said new legal provision established that the companies' net equity was then composed of the following accounts: "capital stock, capital reserves, equity valuation adjustments, profit reserves, treasury stock and accrued losses."