Net worth calculation
Page no : 2
shahyar husain
(1240 Points)
Replied 20 December 2020
M Venkat
(CA finalist)
(456 Points)
Replied 08 January 2021
Yes preference share capital will be included.
Reference :As per Sec 2(57) of The Companies Act,2013 “net worth” means the aggregate value of the paid-up share capital and all reserves created out of the profits and securities premium account, after deducting the aggregate value of the accumulated losses, deferred expenditure and miscellaneous expenditure not written off, as per the audited balance sheet, but does not include reserves created out of revaluation of assets, write-back of depreciation and amalgamation;
Paid up share capital as defined-2(64) : paid-up share capital” or “share capital paid-up” means such aggregate amount of money credited as paid-up as is equivalent to the amount received as paid-up in respect of shares issued and also includes any amount credited as paid-up in respect of shares of the company, but does not include any other amount received in respect of such shares, by whatever name called;
Ritik Chopra
(student)
(8128 Points)
Replied 13 February 2021
Net worth can be calculated from balance sheet from the following equation. Net Worth= Equity + Reserves & surplus - Fictitious assets/Misc Exp.
Deepika Pawar
(B.Com)
(22 Points)
Replied 14 July 2021
Can we include provisions in NET Worth Calculation
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 14 July 2021
Provision can be created for restructuring, decommissioning and dismantling and include it in the carrying amount of PPE.
Provision cannot be created fo future operating losses. If this is the case, reserves will be used to create provision.
I don’t know other provisions, which use reserves, and even if that is the case, reserves will decrease impacting the net worth.
In the formula, no need to include provisions.
https://vinodkothari.com/2018/11/impact-of-fair-value-changes-on-retained-earnings-during-first-time-ind-as-adoption/
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