Calculation of intrinsic value of shares

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Deepali

CA Final Student

105 Points Joined July 2012

Dear friends,

When we calculate intrinsic value of shares, why don't we consider miscellaneous expenses like Preliminary expenses and discount on issue of debentures ?

What is the reason for not taking those items in the balance sheet in our intrinsic value calculation ?

Replies (1)

SHINY

CA Final Student

699 Points Joined February 2012

When we calculate IV of shares, the basic formula is 'Assets-Liabilities' & resultant we get Net Assets which belong to Equity Shareholders & misc expenses like preliminary expenses & discount on issue of debs etc form part of EQUITY SHARE CAPITAL & not Assets or Liabilities. I hope ur confusion has been resolved.