Let me know while calculating net worth of a company, we should consider share application money or not
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Net worth calculation of a company
Replies (5)
no....share alloted money should be considered
it is not added while calculating net worth of company.networth means aggregate of paid up equity capital and free reserves ( excluding reserves created out of revalution) reduced by the aggregate value of accumulated losses and deffered expenditure not written off(including miscellaneous expenditure not written off).
share application money will not be consider because it does't comes under paid up capital.
agree with both..
valuation of assets by valuer
In the new Companies Bill, also credit balance in Profit & Loss A/c has been excluded in the calculation of Net Worth - Clause 2(57). Further, Profit & Loss balance and Share Premium A/c are not considered as Free Reserves.
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