Fair value and Off-balance sheet finance: Difference between pages

Revision as of 08:18, 25 July 2014

Any form of finance that does not result in a corresponding liability appearing on the entity's published balance sheet.

On double-entry bookkeeping principles the asset being financed cannot appear either.

The effect of such financing and accounting methods is to show the company's borrowings and financial risk at a lower level than they really are.

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-# The amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm's length transaction.
+Any form of finance that does not result in a corresponding liability appearing on the entity's published balance sheet.
-# More specifically, the price at which an asset can be bought or sold in transparent markets, where contracting parties are informed and act in their best interest.  It represents the theoretical equilibrium price of securities or derivatives on open markets, for example,  both buyers and sellers do not perceive them as overpriced or under-priced.
-# ''Financial reporting.''  The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
+On double-entry bookkeeping principles the asset being financed cannot appear either.
-: Also known as Fair market value.
+The effect of such financing and accounting methods is to show the company's borrowings and financial risk at a lower level than they really are.
 == See also ==
-* [[Assets]]
+* [[Balance sheet]]
-* [[FRS  7]]
+* [[Double entry]]
-* [[IFRS 13]]
+* [[ED 2010/9]]
+* [[Finance lease]]
+* [[Gearing]]
+* [[IAS 17]]
 * [[Liabilities]]
+* [[Off balance sheet]]