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Retained earnings are a little different. Remember the formula for the balance sheet? (Assets = Liabilities + Equity?) If you’ve filled out the rest of your balance sheet template, then you will have only retained earnings left to work with. Therefore, retained earnings are equal to Assets – Liabilities – Contributed Capital.
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For the purposes of the balance sheet, the assets are the total of everything your business has are valued by the business. This might be something that’s in the form of real property, such as an office building with a parking garage. It could also be stocks, bonds, or working capital such as heavy machinery and equipment. Some businesses will even include their unsold inventory in this section.
How Is Equity Valued on a Balance Sheet Template? There are two types of capital that are typically put in the company. These are stock, contributed capital, etc. and then, the earnings of the company, usually called retained earnings. Capital that is contributed is pretty straightforward. If your assets are something other than cash, such as machinery, or stock in another business, use the rules for the valuation of assets. This means you should choose the lessor of cost or fair market value.