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
Finance a la shmoop what is a residual claim to assets? alright people here's an
investment and here's an investment gone bad well here's the result and you have [Cash burning]
a claim to the crumbs of dollar bills here the investment in hair for days.com
didn't go so well instead of regrowing hair as it promised
it actually made hair disappear in you know other places so the investors eight
million bucks is mostly gone Microsoft is buying the company for a
scrap price of five million since you were the preferred stock investor and
there was no debt junior or senior or otherwise no IRS bills owed no vendor
bills owed just the preferred IEU well you have this residual claim to the you know
financial residue and the eight million bucks you invested went to Jenny Craig [Man with briefcase of 8 million dollars appears]
dieted down to only five million bucks which now come your way via your
residual claim to assets fingers crossed your next investment goes a bit better
but hopefully this one will put a little hair on your chest it happens [Man with hairy chest appears]
Up Next
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...