Economic Definition

wilsonchan18

Hi,

incorporating these adjustments provides for a more economic and consistent view of capital available

The above is the reason why we need adjustment on unadjusted AC. May I know how to interpret "more Economic" view?
More probable to losses? More Risk-based?

Thanks and Warm Regards,
Wilson

graham

The unadjusted capital from the balance sheet doesn't account for everything that's important in evaluating a company's capital. For example, the unadjusted capital would not include off-balance sheet losses, but these losses are important because they potentially have an economic impact on the company. Here's a quick definition:

• Off-balance sheet items is a term for assets or liabilities that do not appear on a company's balance sheet. Off-balance sheet items are typically those not owned by or are a direct obligation of the company.

wilsonchan18

Sure Graham, this makes sense to me!
Thanks Bro!