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.
In 2019 Fall Question 12b, one of the answers of non-admitted asset is real estate. However, in 2019 Spring Question10a, real estate is used as the admitted asset in calculating the statutory surplus. My question is, so is real estate considered as admitted asset or non-admitted asset?
See this thread:
https://battleacts6us.ca/vanillaforum6us/discussion/1086/2019-fall-12-and-2019-spring-10-contradiction#latest