Off-Balance Sheet Assets and Liabilities

The term off-balance sheet can refer to assets or liabilities that are not on a company's balance sheet. These off-balance sheet assets and liabilities must be carefully evaluated by both buyers and sellers when determining, the value of a business and its most likely selling price.

An example of an off-balance sheet asset would be accounts under management such as property management accounts that earn recurring fees, but where the managed assets are owned by other parties. The income generated by such accounts have value and can be sold.

An example of an off-balance sheet liability would be an equipment lease where the company has an obligation to pay a monthly fee but has not signed a note payable.

Off-balance sheet assets and liabilities should be footnotes to company financial statements but are sometimes omitted.

Sale and Lease Back or Sale-leaseback

 

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