STATEMENT OF CHANGES IN EQUITY

The statement of changes in equity presents an entitys profit or loss for a reporting
period, items of income and expense recognized in other comprehensive income for the
period, the effects of changes in accounting policies and corrections of errors recognized
in the period, and the amounts of investments by, and dividends and other distributions
to, equity investors during the period.
A statement of changes in equity reflects all changes in equity between the beginning
and the end of the reporting period arising from transactions with owners in their
capacity as owners (i.e. owner changes in equity) reflecting the increase or decrease in
net assets in the period. This statement provides a linkage between the entitys
statement of financial position and its statement of comprehensive income
Under IFRS, as in the case of Volkswagen, Total comprehensive income for the period
shows separately the total amounts attributable to owners of the company and to noncontrolling interests. For each component of equity, a reconciliation between the carrying
amount at the beginning and the end of the period is shown separately disclosing changes
resulting from: profit or loss, each item of other comprehensive income, the amounts of
investments by, and dividends and other distributions to, owners, showing separately
issues of shares, treasury share transactions, dividends and other distributions to owners,
and changes in ownership interests in subsidiaries that do not result in a loss of control.
With regards to US GAAP, a separate statement of changes in equity is not required.
Changes in equity may be presented in the notes to the financial statements.
Comparing the two statements, total equity for Volkswagen in 2010 grew by 30.14%
from the beginning to the end of the year whereas that of GM grew by 22.76%. Profit
after tax also increased appreciably for Volkswagen from 911 million euros to 7226
million from January 2009 to January 2010. One of the main contributing factors to the
significant growth of equity in 2010 for Volkswagen was primarily due to Capital
increase. Volkswagen recorded a cash inflow of 4.1 billion euros from the Capital
increase implemented in fiscal year 2010 by issuing new preference shares. In addition to
this, the noncash effects of recognizing deferred taxes amounted to 35 million euros and
an inflow from the exercise of convertible bonds amounted to 2 million euros.
It should also be pointed out that GM had an accumulated deficit at the end of the 2009
fiscal year, which was offset by a positive Net income for 2010 enabling them to earn a
surplus by the end of the 2010 fiscal year. Volkswagen on the other hand maintained a
positive Retained earnings for both the 2009 and 2010 fiscal year.
GM had a cash flow hedging loss by the end of the 2009 fiscal year of 20 million, by the
end of 2010 fiscal year they experienced a gain of 13 million. Volkswagen on the other
hand had a decrease in cash flow reserve of about 25%.

Total comprehensive income for Volkswagen increased from 1317 million euros in 2009
to 7943 million in 2010, over 500% increase. Volkswagen AG issued 64,904,498 new
preferred shares (with a notional value of 166 million) as part of a capital increase in the
reporting period. In addition, Volkswagen AG issued 40,170 new ordinary shares (with a
notional value of 102,835) as a result of the exercise of convertible bonds from the
seventh and eighth tranches of the stock option plan.
The subscribed capital is thus composed of 295,045,567 no-par value ordinary shares and
170,142,778 preferred shares, and amounts to 1,191 million (previous
year: 1,025 million).
In October 2009 GM completed a participation in an equity rights offering in GM
Daewoo, a majority-owned and consolidated subsidiary, for Korean Won 491 billion
(equivalent to $417 million when entered into). As a result of the participation in the
equity rights offering, GM ownership interest in GM Daewoo increased from 50.9% to
70.1%.
In December 2009 GM acquired the remaining noncontrolling interest of CAMI from
Suzuki Motor Corporation for $100 million increasing their ownership interest from 50%
to 100%. This transaction resulted in no charge to Capital surplus.
Under IFRS the statement shows total comprehensive income for the period, showing
separately amounts attributable to owners of the parent and to non-controlling interests.
Reconciliation between the carrying amounts at the beginning and the end of the period
for each component of equity, should be separately disclosed. Thus profit or loss, each
item of other comprehensive income, transactions with owners, showing separately
contributions by and distributions to owners and changes in ownership interests in
subsidiaries that do not result in a loss of control are all represented on the statement.
However, the amount of dividends recognized as distributions, and the related amount per
share, may be presented in the notes instead of presenting in the statement of changes in
equity.
A retained earnings statement is required by the U.S. Generally accepted Accounting
Principles (U.S. GAAP) whenever comparative balance sheets and income statements are
presented. It may appear in the balance sheet, in a combined income statement and
changes in retained earnings statement, or as a separate schedule.
Therefore, the statement of retained earnings uses information from the income statement
and provides information to the balance sheet..
Retained earnings are part of the balance sheet (another basic financial statement) under
"stockholders equity (shareholders' equity)" and is mostly affected by net income earned
during a period of time by the company less any dividends paid to the company's
owners / stockholders. The retained earnings account on the balance sheet is said to
represent an "accumulation of earnings" since net profits and losses are added/subtracted
from the account from period to period. Retained Earnings are part of the Statement of
Changes in Equity. The general equation can be expressed as following:

Ending Retained Earnings = Beginning Retained Earnings Dividends Paid + Net

Income
This equation is necessary to use to find the Profit Before Tax to use in the Cash Flow
Statement under Operating Actvities when using the indirect method. This is used
whenever a comprehensive income statement is not given but only the balance sheet is
given.