For computation of Net Worth, should we consider :-
Capital reserve, surplus arising on sale of land, Capital Reserve-Nursery Tea Garden, Securities Premium, Revaluation Reserve?
While surplus arising on sale of land is added to Capital reserve, at the same time-there is adjustment (less) on sale of Land + transfer to P & L on account of depreciation of revaled assets from Revaluation Reserve.
Kindly guide. We are from Tea Gardens.
For computing Net Worth, consider the following:
1. Capital Reserve: Yes, include it.
2. Surplus arising on sale of land: Yes, include it, but adjust for the depreciation of revalued assets (explained below).
3. Capital Reserve-Nursery Tea Garden: Yes, include it.
4. Securities Premium: Yes, include it
. 5. Revaluation Reserve: Yes, include it, but adjust for the depreciation of revalued assets (explained below).
Adjustments: - Surplus on sale of land is added to Capital Reserve, but also adjust for the depreciation of revalued assets (transfer to P&L) from Revaluation Reserve. - Depreciation of revalued assets (from Revaluation Reserve) is adjusted against the Surplus on sale of land.
Net Worth computation:
1. Add: Capital Reserve, Surplus arising on sale of land (adjusted for depreciation), Capital Reserve-Nursery Tea Garden, Securities Premium, and Revaluation Reserve.
2. Subtract: Depreciation of revalued assets (from Revaluation Reserve) adjusted against Surplus on sale of land.
CCI
Pro
CAclubindia
