how to calculate capital owned in accounting?

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  • csanda
    Lv 6
    1 decade ago
    Favorite Answer

    Unfortunately, "capital owned" is not a typical GAAP term.

    In accounting, "capital" typically includes 1) owners' equity, 2) minority interests, 3) debt, 4) capital leases and 5) quasi-debt or equity (e.g. indefinite interest-free loan from shareholders).

    Only owners' equity and minority interests are "owned". Companies do not "own" debt or leases.

    Capital calculation depends upon which set of GAAP (Generally Accepted Accounting Principle) you are using. For example, let's say you have a paper company that grows its own trees for pulp. Some GAAP says the tree have almost no book value because they are recorded at "cost", with profits being realized once the trees grow, are cut down, turned into pulp and finally sold as paper. International GAAP (e.g. IMAS 51), for companies that follow "International GAAP", require that the trees get revalued upward every year for its estimated fair value. So if you are in India, use Indian GAAP, United States uses US GAAP and other places use their own GAAP.

    Furthermore, it does NOT mean assets. Assets is one side of the balance sheet (offset by liablities and owners' equity). First, all assets are not depreciated. Only fixed assets are depreciated (and even then, land is not depreciated). Every other asset is NOT depreciated.

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  • friedt
    Lv 4
    3 years ago

    Capital Owned Formula

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  • 1 decade ago

    Capital owned? Do you mean assets? Equity?

    Equity (which is your bottom line) is calculated by taking all your assets and subtracting all your liabilities. Assets are another story as assets have to be depreciated: for that you need an accountant who knows the current laws.

    PS - I think you need to be more specific in your ?

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