Question

What is the term called when a company pays for a set of assets that is worth more than their company’s worth if they liquidised all their assets and paid back all their liabilities(Book Value)?
Is it called ‘impairment’?

Answer 1

Offsetting Assets and Liabilities  is when a company pays for a set of assets that is worth more than their company’s worth if they liquidised all their assets and paid back all their liabilities(Book Value)

Explanation:

A firm who wants to restructure and to infuse further finance into the business they will go for the above said option stated in the question. The   term offsetting of assets and liabilities is being used to refer for the above mentioned transaction in the question.

According to the accounting principle the company will sell of his assets which is more than the company’s worth will pay off their liability simultaneously and then they proceed for the restructuring of finance. This way it will help them to minimise their debt and the firm can declare it a debt free company.