plz anyone tell me about how the financial assets and liabilities are offset in financial statement and also what is the criteria or requirements of offsetting the assets and liabilities.
thanks and regards
Financial assets and financial liabilities can only be offset if
1) There is a legal enforceable right to do so, and
2) The company either intends to settle on a net basis, or to settle the liability and realise the asset simultaneously
An example is case of finance lease could be the advance (down payment) that can be adjusted against the lease liability for same asset.
Financial assets is a representation of the monetary value of a physical item. It obtains its monetary value from a contractual agreement of what it represents.
Financial assets and financial liabilities are offset, the net amount is reported in the balance sheet when the Group has a legally enforceable right to set off the recognised amounts. It intends to either settle on a net basis or to realise the asset and settle the liability simultaneously.