- What are off balance sheet items? How are they presented in financial statement. And why are they important?
Madhu ThapaIntermediate
Accounts
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Material items not finding a place in the balance sheet because either their economic impacts are not certain or not reliably measurable are off-balance sheet items.
Various regulations and reporting frameworks are in place for comprehensive disclosures for off-balance sheet items in India and globally.
It is a term for assets or liabilities that don’t appear on a company’s balancesheet .Although not recorded in the balancesheet but they are still assets and liabilities of the company.off balancesheet items are those not owned by or direct obligation of the company.e.g.operating leases ,joint ventures,when loans are securitized and sold off as investment,secured debt often kept off the banks book.
They are presented in accounting statement formally and may also refer to assets under management
It is an important concern for investor when assessing a company financial health and it is used to share the benefits and risk of assets and liabilities with other company’s ,as in the case of joint venture