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| If your completing a financial statement for your banker, just do it the way they ask. They want it a certain way to conform to their standards. The standards will differ from bank to bank slightly. Bit you arent going to be able to game the bank because each bank controls their own credit standards and also carry their own override button. They all want good loans. And they all know a good line from a bad line no matter what the borrower self values their land at.
Most want cost basis so they can quickly and efficiently determine earned vs unearned net worth increase. These are terms that have meaning to bankers - unearned does not mean undeserved - I think someone viewed it as such last time I used that term on here and took offense to the term. For credit analysis, many banks will assign their best guess to market land values "behind the scenes" as a part of their analysis. Any bank using market values for real estate on balance sheets really should also keep track of cost basis as well and place a long term capital gain tax obligation under long term liabilities. | |
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Balance sheet adjustment
