Is a debt considered to be an asset, in your black art.
Is a debt considered to be an asset, in your black art.
All spelling mistakes and grammatical errors in my post's are intentional.
Does that mean "yes" sorry but I'm not big into the black arts.
Sorry I didn't understand it either,thought it might enlighten you a bit.
All spelling mistakes and grammatical errors in my post's are intentional.
Debt does appear on the Balance Sheet but as a liability. It is part of the funding of the business but it cannot be shown as an asset otherwise it will muck up your gearing ratio (how much you have borrowed against assets).
Some companies tried to get really cute with debt a few years ago and put them under assets and amortised them. It made them look more liquid than they really were. They all went spectacularly tits up. I think they were largely responsible for the Cadbury Report. Coloroll the wallpaper crowd were culprits of this as I recall. Everything looked all right on the books but when interest rates peaked in the mid 90s they couldn't service the debts. A kind of mini Enron.
Not sure if that helps really
Cogito cogito ergo cogito sum
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