calculation of networth

[Vivek Hegde]

Dear all

Can anybody tel me the formula for calculation of Networth to be disclosed in Annual Report?

I understand it is Paidup cap+Reserves and surplus-Debit bal in P&l-Msc Exp....

But the amount of networth shown in the Annual Report of some of the Big cos is diiferent....

pls clarify..

rgds

CS Vivek Hegde,B.com, ACS, CWA
Company Secretary in Practice
No. 405, 4th Block, 7th Cross
Koramangala, Bangalore-560034
Mob: 9019756940

[yoganand l]

where do u disclose the networth

for calculation of what.

[raja karthik]

ur right vivek

 

PAID UP CAP + RESERVES (INCLUDE SECURITIES PREMIUM) - P & l DEBIT AND MISCELLANEOUS EXP- INTANGIBLE ASSETS-CONTINGENT LIABLITIES

 

Regards,

Karthik

 

[siddharth mittal]

Dear Karthik,

i have a doubt in this calculation of networth. the doubt is Securities Premium amount is of capital nature, and in calculating networth for shareholder we only consider Revenue Reserve/ Profits.

If i am wrong then please correct me.

2009/8/8 raja karthik <rkart...@gmail.com>

Rajasthan,
 

[raja karthik]

Dear Siddharth,

 

As far as Securities Premium account is concerned it is definitely of capital nature only it is neither a revenue profit or revenue reserves, it stands on par with the Share capital only. That is why it is deducted.

 

Moreover if u see Companies Bill, 2009 Clause 2 (zzg) the definition is clear which I am reproducing for you :

 

(zzg) “net worth” means the aggregate value of the paid-up share capital and all reserves created out of the profits and share 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;

 

Regards,

 

Karthik

[raja karthik]

Sorry it is added

[Vivek Hegde]

Dear all

 

thnks for your views

 

Here is a table....

 

Tel me how Networth is arrived at.....

 

YEAR ENDED	2009	2008	2007	2006	2005
Assets Employed   Fixed Assets (Less Depreciation)   Investments   Net Current Assets   Other Assets     Financed by   Equity Shares   Reserves   Loan Funds   Deferred Tax     Profit and Appropriation   Sales   Gross Block   Depreciation   Net Block   Profit/ (Loss) After Tax   Dividend   Retained Earnings   Net Worth	635.52     108.94   1503.90	583.69     138.94   1728.39   ----------	569.30     172.26   1449.83   ---------	497.29     386.15   1280.57   16.96	500.11     290.87   1186.06   26.63
	2248.36	2451.02	2191.39	2180.97	2003.67
	351.17   1091.54   780.60   25.05	351.17   1060.51   1016.51   22.83	351.17   1013.42   803.97   22.83	351.17   717.62   1087.98   24.20	351.17   653.10   973.81   25.59
	2248.36	2451.02	2191.39	2180.97	2003.67
	3930.42   1080.53   445.01   635.52   31.96   0.00   45.00   ……….	4277.37   1017.63   433.94   583.69   93.71   41.09   70.00   1130.18	4112.58   966.44   397.14   569.30   398.28   98.99   275.00   1081.29	3763.10   861.79   364.50   497.29   146.49   70.23   40.00   766.77	2844.00   849.47   349.36   500.11   85.82   40.04   40.00   714.54

rgds
 

Sorry it is added

2009/8/8 raja karthik <rkart...@gmail.com>

--

[siddharth mittal]

dear karthik you are giving me reference of Companies Bill 2009, and i have a doubt as per companies act , 1956, in ur opinion what do you think as per prevailing act.

2009/8/11 raja karthik <rkart...@gmail.com>

--
Siddharth Mittal,
Lecturer,FASC ,MITS,
Laxmangarh,Sikar,
Rajasthan,

[raja karthik]

Dear Siddharth,

 

Hope u agree on the fact that Securities premium is not a revenue profit or revenue reserve...

 

If u read Section 78 there is always an attempt is there to treat it on par with share capital, that is why I said it is just like share capital only...

 

Hope u agree with me that for calculating NW u add to the share capital free reserves...

 

If u see the explanation to free reserve under section 372A or under I think deposit rules (not sure) whenevrer free reserves are taken share premium is added to the same but share application money

 

Now tell ur views..

 

Regards,

Karthik

 

[siddharth mittal]

thank you karthik for ur eloborative view.but i am asking my question from accounting point of view, any reserve that should be distributed among shareholders that should be free.free here means that should be revenue in nature. my question is simply that securities premiun a capital nature reserve, if we will include it in networth it will belong to shareholders.how can we distribute a reserve or profit among shareholders which we did not earn through our operational activity.

if i am wrong then please do correct me, well i have read Sec. 78 in this section  here is a point , it said the amount of securities premium can be used for  issuing fully paid Bonus shares. but this entry is passed to overcome the situation of undercapitalisation .  no cash is involved in this entry. but we can say one more thing ki when we issue bonus share a shareholder can sells his shares in the open market, and he can get the amount of capital reserves. but dont u think this practice will hamper accounting procedures n practices. one more thing every company will try to issue its share on higher premium to raise its Net worth.

what do you think on the above matter please tell me.your views are solicited.

2009/8/12 raja karthik <rkart...@gmail.com>