The Statement of Assets and Liabilities, commonly known as the Balance Sheet, summarizes what an individual or business owns and what it owes. The difference between total assets and total liabilities is Net Worth.

Along with your Income Statement, the Balance Sheet is a routine part of every loan application. Lenders review a potential borrower’s list of assets and liabilities to help determine the ability to repay a loan.

This workbook contains a standard Balance Sheet, which summarizes your assets and liabilities positions, and two additional worksheets – Assets Details and Liabilities Details. Use the Details worksheets to provide more in-depth listing of your assets and
liabilities, and bring the calculated sub-totals for each category forward to the main
Balance Sheet.

Typically, the Balance Sheet is divided into current and long-term assets, and current and long-term liabilities. Subtracting current liabilities from current assets gives an indication of short-term cash position and ability to pay existing or upcoming bills and loan payments. Subtracting long-term liabilities from long-term assets indicates the ability to repay a loan in the event that a borrower runs into financial difficulties and must liquidate assets to pay off creditors. We have added sub-categories to separate fishing assets from non-fishing assets.

Current Assets are cash or other assets which can be converted (liquidated) to cash in a short period at little or no expense. Commonly, they are thought of as those available over the next 12 month period. Because they can be easily liquidated, current assets are often referred to as “liquid assets.” Included are checking and savings accounts, certificates of deposit, stocks, bonds, and other salable securities, uncollected income from the sale of fishery products to a cannery or other buyer, money due from the sale of equipment, and loans to friends or relatives—assuming they are collectible. Other such assets include prepaid insurance or rent, and the cash value of an ordinary life insurance policy. Money in a Capital Construction Fund account should not be treated as a current asset. Even though it may be readily available in theory, taking money out of a CCF prematurely or for other than approved purposes can result in substantial tax consequences and or penalties. For these reasons it is prudent to treat CCFs as Long-Term Assets.

Also included are pre-paid expenses like insurance, storage space leases, and moorage. You should list only the remaining value of such pre-paid expenses. For example, if six months of vessel insurance coverage remains at the time you prepare a statement of assets and liabilities, enter the remaining six months value of the insurance as a current asset.

Note that the Balance Sheet has Purchase Price and Fair Market Value columns for current and long-term assets. In the Current Assets most of these values will be the same. So enter the values in the User Input Fields under Current Value, and those same values will be automatically entered under the Purchase Price column. The exception is Marketable Stocks & Securities. In this case you must list both the original purchase price and the current value of stocks, bonds, and other marketable investments whose value changes with time.

Long-Term Assets are commonly major investments. Some are depreciable such as vessels and equipment, fishing gear, warehouses, and vehicles. Long-term assets which are not depreciable include land, stock in family or closely held corporations, or mortgages or contracts held on property being purchased from you. Fishing permits and IFQs (if purchased after August 10, 1993) are long-term assets that can be amortized, that is they can be “written off” for tax purposes over a 15-year period, much like capital assets can be depreciated over time. The characteristic that distinguishes long-term assets from current assets is that long-term assets are not intended to be purchased and sold within one year, nor do they wear out in that time period. With Long-Term Assets you must list both the original Purchase Price and the current Fair Market Value.

Current Liabilities include bills and notes, loan payments, and taxes due within one year or one accounting period. Notes are short-term loans from a bank or other creditors. Long-term loans stretch over more than one year and are considered long-term liabilities. However, the payments on long-term loans which are due during the current are considered current liabilities. Include both the principal and interest on notes and long-term loan payments due. For the sake of simplicity, do not list principal and interest separately. Taxes payable within one year or one accounting period may include back taxes owed plus estimated taxes payable on net income shown on the income statement. Unpaid property tax assessments, employee withholding taxes, and social security taxes are also current liabilities.

Long-Term Liabilities are the remaining balances on mortgages and loans that are scheduled for repayment over a period of more than one year. This is net of the principal payments that come due within one year and fall into the category of current liabilities. Note: Do not include anticipated interest payments. Because you have the option to pay off a loan at any time, interest is not a liability until it has actually been accrued.

Totals from the completed Assets and Liabilities sections are displayed in the bottom section of the Balance Sheet and Net Worth is automatically calculated. Net Worth is simply Total Assets minus Total Liabilities. It reflects what would remain after selling all assets and paying all debts. Note that two values for Net Worth are calculated. By one method of calculation, all assets are valued at original Purchase Price, also known as “book value”. By the other method, long-term and certain short-term assets (Marketable Stocks & Securities for example) are valued at current Fair Market Value. Bankers are most interested in Fair Market Value as that represents what can be reasonably viewed as security for loans. For tax purposes you typically look at Purchase Price, or what is known as cost basis, in order to compute gain or loss on the sale of an asset.