In value added statement, Earning available for distribution = PBT-Depreciation- interest on loan- taxes- employee contribution towards PF
Whether this statement is right or wrong, if it is wrong please specify me which items not considered from profit and loss while making value added statement.
13 August 2013
It should be Gross value added instead of PBT that has to be computed from Value added statement . From there you have to prepare a reconciling statement considering major areas GVA and PBT i.e. either pick up GVA and arise on PBT or vice-versa If you pick up GVA then PBT=GVA-employee expense(like salaries etc)-director's expense(like salries )-Interest on long term loan-depreciation. From there calculate PAT & reduce preference dividend to arrive at earning for shareholders
13 August 2013
Sample GVA statement Sales & other expense=xxx(A)
Cost of brought in material and services=xxx all other expense except any expense relating to director,employees,interest on long term loan.taxes ,shareholders and entity itself(general reserve,retained earning,depreciation etc) =XXX
arrive at value added from above and then adjust indeirect income and extraordinary items to arrive at gross value added. Then make above adjustments