hidden reserve

Hidden Asset

Value that a person or company possesses that does not appear on its balance sheet. One may have a hidden asset due to an accounting convention. For example, a company may be required to depreciate an asset faster than its actual value declines. This results in a higher net worth for the company than would be reflected in its books. A hidden asset is also called a hidden reserve or a hidden value.

Secret Reserve

The amount by which shareholder equity in a company exceeds the amount claimed on its financial statements. Secret reserves arise when a company overstates its liabilities or understates its assets, usually because its accounting practices depart from GAAP. In such cases, the company must declare that its accounting is different from that of most other companies. The secret reserve may eventually be converted to cash and distributed to shareholders. It is also called the hidden reserve.

hidden reserve

The amount by which a firm's net worth is understated. For example, overdepreciation results in assets and net worth being carried on the firm's financial statements at less than market value.

hidden reserve

the undervaluation of the ASSETS, or overvaluation of the LIABILITIES, of a firm in its BALANCE SHEET. For example, the value of a firm's land and buildings may be shown in the balance sheet at HISTORIC COST or original cost, whereas the current market price of those assets may be considerably higher. Thus, if the assets were to be revalued to reflect current market values the difference would be formally recorded in the balance sheet as an addition to capital RESERVES. See INFLATION ACCOUNTING.

hidden reserve

the undervaluation of the ASSETS or overvaluation of the LIABILITIES of a firm in its BALANCE SHEET. For example, the value of a firm's land and buildings may be shown in the balance sheet at HISTORIC COST or original cost, whereas the current market price of those assets may be considerably higher. Thus, if the assets were to be revalued to reflect current market values, the difference would be formally recorded in the balance sheet as an addition to capital RESERVES. See INFLATION ACCOUNTING.

hidden reserve

hidden reserve

Hidden Asset

Secret Reserve

hidden reserve

hidden reserve

hidden reserve

hidden reserve

Words related to hidden reserve

noun reserves that do not show up on the balance sheet (as by understating values)

Related Words