Ivan is an investor who is looking to invest in new businesses. He is reviewing several companies and working out what his equity would be. Which of the following does Ivan need to know to calculate shareholder equity? Select TWO.

Shareholder equity is calculated using the fundamental accounting equation: Assets = Liabilities + Equity. By rearranging this formula, we get: Equity = Total Assets - Total Liabilities. Therefore, to calculate the total value of shareholder equity at a specific point in time, one must know the company's total assets and its total liabilities as reported on the balance sheet.

A. Net profit is a component of the income statement and shows performance over a period; it contributes to retained earnings but is not the total equity itself.
B. Net income is synonymous with net profit and is also an income statement item, not a direct input for the primary equity calculation from the balance sheet.

1. Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2019). Financial Accounting (11th ed.). Wiley. Chapter 1, "Accounting in Action," introduces the basic accounting equation: Assets = Liabilities + Stockholders' Equity (p. 12).

2. Bodie, Z., Kane, A., & Marcus, A. J. (2018). Investments (11th ed.). McGraw-Hill Education. Chapter 18, "Financial Statement Analysis," explains that shareholder's equity is the residual claim on the firm's assets after deducting its liabilities, as shown on the balance sheet.

3. MIT OpenCourseWare. (2004). 15.511 Financial Accounting, Fall 2004. Massachusetts Institute of Technology. Lecture Notes, "The Balance Sheet," defines the accounting equation and its components.