![Equity – Residual Income](https://forum.sseiqforum.com/wp-content/uploads/2021/10/Doubt-260x185.png)
Can someone please throw some light on how is A correct?
I believe when we make adjustments for non-recurring items, these flow to the balance sheet and adjust the book values of Equity. Therefore, we are indirectly making adjustments to the BV of Equity.
An analyst will adjust non-reccuring items from “reported net income”.
Book value is adjusted for off balance sheet financing, discrepancies from fair value or the amortization of certain intangible assets.
Please read summary given in the book last two points.