At the end of the term, the business can be valued again instead of physically selling every asset.
• The new valuation shows the increase or decrease in total value.
• This may be treated as constructive liquidation.
• Profit can therefore be determined without shutting down the running business.
Term explanation: Constructive liquidation: determining the business value as if it were settled, without actually selling every asset.
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Transaction and Working-Capital Financing
At the end of the term, the business can be valued again instead of physically selling every asset.
• The new valuation shows the increase or decrease in total value.
• This may be treated as constructive liquidation.
• Profit can therefore be determined without shutting down the running business.
Term explanation: Constructive liquidation: determining the business value as if it were settled, without actually selling every asset.