Hidden asset definition
/What is a Hidden Asset?
A hidden asset is an asset that is either not stated or understated on the balance sheet of the reporting entity. These assets are not necessarily being deliberately hidden; it is quite possible that the method of accounting being used simply mandates that the recorded value of an asset will be lower than its actual market value.
Examples of Hidden Assets
As an example of a hidden asset, a business may use an accounting convention, such as accelerated depreciation, to drastically reduce the net book value of fixed assets that actually have significantly higher market values. As another example, a business invests in its brand image for many years, but accounting convention requires that the related expenses be charged to expense as incurred. The value of the brand asset may be the single largest asset value in the business, but none of this amount appears on its balance sheet.