Close equity and make the policy note entity-specific

The statement of changes in equity is where several reporting streams meet. Net income changes retained earnings. OCI changes AOCI or another specified equity component. Contributions and distributions are owner transactions, not comprehensive income. Other equity transactions require their own authority and component analysis.

Close with a component matrix

For every equity column, show opening balance, net-income allocation, OCI and reclassification effects, contributions, distributions, other authorized movements, ownership attribution, and ending balance. Tie ending columns to the balance sheet and tie period flows to the income and comprehensive-income statements.

One total equity tie can conceal an error between retained earnings and AOCI. Component-level control prevents an offsetting mistake from passing.

Policy is not estimate, fact, or copied rule

An accounting policy explains how Granite Harbor applies a recognition, measurement, presentation, consolidation, or other accounting principle to its material transactions. The selected cost-flow method can be policy. An obsolescence rate is an estimate. The number of warehouses is a fact. A reviewer sign-off is a control. A paragraph copied from GAAP is authority, not yet the entity's policy explanation.

For each proposed policy sentence, ask:

• Which actual transaction or balance does it explain?
• Which method, election, or scope choice did the entity make?
• Where does that choice affect the statements and notes?
• Did the policy or transaction population change?
• Does the wording expose or obscure material entity-specific information?
• Which contract, schedule, system, and owner support it?

Delete text for transactions the entity does not have. Preserve necessary technical terms, but explain how the method operates for this entity rather than pasting the standard's general objective.

Five-way sort

Classify these as policy, estimate, fact, authority, or control: “uses FIFO,” “expects 3 percent returns,” “operates four plants,” “ASC 330 requires…,” and “the controller approved the schedule.” Then state what additional information makes the policy disclosure useful.