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The book value was predicated on holding the assets to maturity. A bank run is a bank run, it doesn’t matter what you hold if all your customers demand their m
by comte7092 4y ago
The book value was predicated on holding the assets to maturity.
A bank run is a bank run, it doesn’t matter what you hold if all your customers demand their money back at once.
- SantalBlush 4y ago>The book value was predicated on holding the assets to maturity. That is an accounting practice; it has no bearing on the actual value of the asset. The same is true with calculating cost of goods sold; you can actually choose to use LIFO or FIFO costing to alter the accounting value of your inventory for tax purposes and such. Look up "LIFO liquidation" to see an example of what I mean. Using generally accepted accounting principles, you have some room to conceal extra value or loss on your balance sheet. But the cash flows don't lie.