26 November 2013
Net worth means equity . equity is defined as residual interest in the assets of the enterprise after deducting all its liabilities . thus , equity is the excess of aggregate assets of an enterprise over its aggregate liabilities . It is calculated as Fixed assets + investments + current assets and loans and advances +deferred tax asset- all outside liabilities including deferred tax liability OR Share Capital + Reserves and Surplus - Miscellaneous Expenditure ( to the extent not written off ) deferred tax liability/asset is a liability which arise in the current period due to timing difference and will reverse in future . therefore the same is required to be considered while calculating Net Worth
26 November 2013
Hello The formula that you mentioned is not appropriate i.e. Net Worth = Shared Capital + Reserves and Surplus. You should not make any adjustment for Deferred Tax Assets or Liabilities. Regards
CAclubindia
