Secret reserves are reserves are reserves the existence of which does not appear on the face of balance sheet. In such a situation, net assets position of the business is stronger than that disclosed by the balance sheet.
These reserves are crated by: 1. Excessive dep. of an asset, excessive over-valuation of a liability.
2. Complete elimination of an asset, or under valuation of an asset.
These reserves are crated by: 1. Excessive dep. of an asset, excessive over-valuation of a liability.
2. Complete elimination of an asset, or under valuation of an asset.
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