Restricted Asset

  

Categories: Accounting

It's an asset. But you can't sell it. So it carries a discount. That $100,000 country club membership? Yes, it's an asset. But you can only sell it through the club's "brokerage department," for which they will take a hefty 30% commission. So yes, you paid $100k upfront, plus monthly dues for years. And yes, it's an asset. It's just not like 100 shares of AMZN, which you can sell in 5 seconds through your broker. When you do go to sell a restricted asset, you have hoops to jump through, just to begin the process of selling, let alone suffer a restricted-buyer marketplace. That country club doesn't allow just anyone to bid on a new membership; applicants must first pass the sniff test of The Five Blue-Haired Old Ladies before they can even think about writing that check. Any asset that is restricted like this, for personal or business accounting, carried a big discount, and all kinds of caveats around what its actual value is.

And yeah, you won't miss this club.

Related or Semi-related Video

Finance: What is a Residual Claim To Ass...2 Views

00:00

Finance a la shmoop what is a residual claim to assets? alright people here's an

00:09

investment and here's an investment gone bad well here's the result and you have [Cash burning]

00:15

a claim to the crumbs of dollar bills here the investment in hair for days.com

00:21

didn't go so well instead of regrowing hair as it promised

00:26

it actually made hair disappear in you know other places so the investors eight

00:32

million bucks is mostly gone Microsoft is buying the company for a

00:36

scrap price of five million since you were the preferred stock investor and

00:41

there was no debt junior or senior or otherwise no IRS bills owed no vendor

00:47

bills owed just the preferred IEU well you have this residual claim to the you know

00:54

financial residue and the eight million bucks you invested went to Jenny Craig [Man with briefcase of 8 million dollars appears]

00:59

dieted down to only five million bucks which now come your way via your

01:03

residual claim to assets fingers crossed your next investment goes a bit better

01:08

but hopefully this one will put a little hair on your chest it happens [Man with hairy chest appears]

Up Next

Finance: What are Hidden Assets?
2 Views

What are Hidden Assets? A hidden asset is an asset that doesn’t show up on a company’s balance sheet. Hidden assets can also be used in referen...

Find other enlightening terms in Shmoop Finance Genius Bar(f)