What are net assets?

Net assets seem to be a rather abstract concept, since their value is determined solely by calculation - physically they do not exist in nature. Perhaps that is why accountants often believe that their calculation is not necessary at all, and the statements attached to the balance sheet in which they must be indicated are simply an extra form.

Concept and valuation of net assets

Net assets are an indicator of the value of the property that is at the disposal of the company, calculated every year. They are the difference between the assets on the balance sheet of the enterprise and its debt obligations. If the company's debt exceeds the value of the property, the net asset indicator is considered negative. In determining the financial condition of such companies, such a concept as property insufficiency is used.

The procedure for assessing the value of net assets is legally established and carried out taking into account the provisions of accounting and other regulations. For this assessment, a calculation is made based on the data contained in the financial statements.

Assets involved in the calculation include non-current assets of the first section of the balance sheet, as well as current assets in the second section, with the exception of arrears of contributions of the founders of the company to the authorized capital. From the list of liability items, short-term and long-term liabilities for loans and borrowings, accounts payable, reserves for future expenses and other liabilities are taken into account.

The joint-stock company estimates the cost of this indicator every quarter, as well as at the end of the year. This information is displayed in the interim and annual reporting.