YES. Under standard accounting rules, it is possible for a company's liabilities to exceed its assets. when this occurs, the owner's equity is negative.
The worth of an asset might increase or decrease because market value is determined by how much it is WORTH. When something becomes useless, its value can significantly decline from where it once was. For instance, if you had a firm that produced flip phones, but no one continued to buy them the following year, your production facility would be worthless.
Unfortunately, the bank still desires to recover its loan in the situation above. The flip phone company's issues with value are unimportant to the bank. The bank will make an effort to recover what is still owed to it.
YES. Under standard accounting rules, it is possible for a company's liabilities to exceed its assets. when this occurs, the owner's equity is negative.
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