Case: Balance Sheet and Personal Financial Information

Case Study Companies must report or disclose in their monetary statements instruction ab kayoed all liabilities, including potential liabilities related to environmental clean-up. There are many situations in which you depart be asked to provide personal financial information about your assets, liabilities, revenue, and expenses. Sometimes you pass on reflection difficult decisions regarding what to disclose and how to disclose it. Instructions Suppose that you are putting together a add application to purchase a home. Based on your income and assets, you qualify for the mortgage lend, but just barely.How would you treat from each one of the following situations in reporting your financial position for the loan application? Provide responses for each of the following situations. a) You signed a guarantee for a bank loan that a friend took out for $20,000. If your friend doesnt pay, you allow have to pay. Your friend had made all of the payments so far, and it appears he wil l be able to pay in the future. For this situation I would be personally liable for the $20,000 he borrowed. It is both a liability and an expense for both parties.When applying for my loan I would have to make authentic to disclose that all payments have been made and on time. Since my friend never failed to make any payments I shouldnt face too much resistance from getting the loan. In my opinion I would non share or disclose this information with the bank since this particular situation does not seem it will become a problem. b) You were involved in an auto accident in which you were at accuse. There is the initiative that you may have to pay as much as $50,000 as part of the settlement. The issue will not be resolved ahead the bank processes your mortgage request.In this case you are have make a liability and another expense. It would be highly unethical not to disclose such information with the bank. If for some reason you omit this information and the bank finds out abou t it later, you could be at fault since you lied to the institution that evaluated their risks without taking in consideration all of the factors involved. It would be wiser to settle your liability of 50,000 dollars before acquiring new expenses. c) The company at which you work isnt doing very well, and it has recently laid complete employees.You are calm employed, but it is quite possible that you will lose your job in the conterminous few months. Since the probability of you losing your job is undisclosed I dont think it would be necessary to disclose any of this information with the bank. However if you receive a loan and lose your job you would still be held liable with this current expense. The only way to make a definite decision is to await and see what happens with your company, or in the other if you want to take a risk and make the loan it would be unwise to disclose your current possibility of losing your job.