Net admitted assets reasoning on BS
For the assets on a balance sheet, why is it important to have net admitted assets (i.e. why it is important to subtract out assets that are not liquid/easy to sell)?
Do we not consider non-admitted assets on the balance sheet because the balance sheet supposed to show strength of company's capital and the assets that are valuable to a company are only for the ones that can be easily liquidated??
Comments
Yes. In the case of immediate liquidation of a company, only liquid assets can be used to pay for liabilities. This is the scenario that SAP is most concerned about.