Networth formula as per IndAS

Hi Yasaswi,

You are right! As per Section 2(57) of the Companies Act, 2013, the formula for Net Worth is:

Net Worth = (Paid-up Share Capital + Reserves created out of profits + Securities Premium Account) – (Accumulated Losses + Deferred Expenditure + Miscellaneous Expenditure written off)

How does this align with Ind AS?

• Ind AS doesn’t define “Net Worth” explicitly, but in practice, Net Worth is considered the same as Equity Shareholders’ Funds.

• Equity as per Ind AS includes:

  • Share capital,

  • Other equity (which includes reserves and surplus),

  • Less accumulated losses or deficit.

So, under Ind AS:

Net Worth ≈ Total Equity = Share Capital + Reserves & Surplus – Accumulated Losses

The key point is to exclude any items not considered equity or those that are amortized/write-offs as per accounting standards.