calculate book value of equity

BV of asset -BV of all debt (LTD, Current Liability and etc)

is that right?

also can someone help me understand adjustment on

LIFO to Current value

Capitalization of operating leases

Pension and liability issue



LIFO to Current value:

  • FIFO inventory = LIFO inventory + LIFO reserve.
  • COGS (FIFO) = COGS (LIFO) – Change/increase in LIFO Reserve
  • LIFO Reserve = FIFO Inventory – LIFO Inventory

Capitalization of operating leases

A finance/capital lease is reported on the balance sheet as an asset and as a liability. In the income statement, the leased asset is depreciated and interest expense is recognized. (VS operating lease: rental expense only. Nothing is recorded on B/S)

Pension and liability issue:

Funded status =fair value - PBO

Total Periodic Pension Cost =Contribution - change in Funded status

Pension cost (go throught P/L) under IFRS:

Current service cost + past service cost +interest expense (discount rate x Funded status)

Pension cost (go throught P/L) under GAAP:

Current service cost + interest expense + expected return on plan assets + actuarial G/L + amortization of Past servcie cost *

* amortization of PSC is only added under “corridor approach”.


GAAP only allow full goodwill which is calulated as:

Purchase price/purchased ownership % - Fair value of net assets (FV of total asset - FV of total liability)

IFRS allow full or partial goodwill. Partial is calculated as:

Purchase price - Fair value of net assets (FV of total asset - FV of total liability) x purchased ownership %

No goodwill is reported under pooling method.