ashu's (student) (78 Points)
17 June 2010What is the networth of a company ?
Company balance sheet are as follow :
Laibilities
Capital & Reserve = Rs. 17 Lac
Loans & Liability (including director loan) = Rs. 6.5 lac
Current Liabilities = Rs. 8.90 lac
Assets
Fixed Assets = Rs. 0.55 Lac
Current Assets = Rs. 11.65 lac
Misc. Assets (Incorporation Expenses) : Rs. 0.11 Lac
Loss of current & previous year : Rs. 20.07 Lac
Currently company in development phase ?
I wanted to know company networth. Kindly do the needful.
Siddarth R Sunder Ram
(Finance Professional)
(230 Points)
Replied 17 June 2010
Under normal circumstances with no loss being suffered, networth=capital+reserves.
However in this case, networth = capital+reserves - accumulated losses
=17 lacs-20.07lacs = -3.07 lacs. Therefore networth is negative.
Sometimes misc. assets is also deducted to find out TANGIBLE networth. So in that case, networth will be 17-20.07-0.11= -3.18 lacs.
Kalpesh Chauhan,
(Tax Assistant (Accounting Technician CA FINAL CS PROF. PROG. B.Com))
(8311 Points)
Replied 17 June 2010
LOKESH
(Fresher)
(80 Points)
Replied 25 June 2010
The Miscellaneous expenses to the extent not written off or the preliminary expenses should not be considered in calculating net worth...
Outside loans should also be deducted as it is a outside liability, Even the loan taken from director should be deducted.
so the correct net worth is
Assets (FA 0.55+ CA 11.65) - Liabilities (CL 8.90 + Loans 6.5) = Networth = (3.2)
negative net-worth
CA. Bhavin Bhagat
(Head - Corporate Finance and Accounts)
(57 Points)
Replied 24 July 2010
First your balance sheet is out by 0.02 lacs.
Formula of Networth is Share Capital + Reserves and Surplus - Misc. Exps.
Therefore Networth is -3.18 lacs.
One may even calculate considering Total Assets - Liabilities ( Except Share Capital & reserves & Surplus) - Misc. Exps. Then it will reflect -3.20 Lacs ( difference is due to difference in balance sheet )
One may calaculate by any formula, answer will be same by both the methods.
Regards,
Bhavin
CAclubindia
