Consolidation of Net External Assets
External assets are assets held outside a company or country. The consolidated balance of net external assets is the total value of all external assets by a company. Consolidation of net external assets is done to pay creditors or heirs and when one business buys another.
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Bankruptcy
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Consolidation of net external assets is required when a company goes bankrupt. These assets must be accounted for and often sold to pay debts. This is called substantive consolidation.
Estates
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Consolidation of net external assets can be part of settling a private individual's estate. All assets, like stocks, bonds and real estate, are sold. After personal debts are paid, the remaining money raised from the sale is distributed to heirs.
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Mergers
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External assets include foreign currency, loans owed by foreigners and real estate owned in another country. Consolidation of net external assets can occur when one company buys another with significant external assets. This process includes merging bank accounts and pension plans and transferring property ownership rights to the new owner. The European Community treaty requires nations consolidating net external assets to the point that they control a large percentage of a resource or commodity report this to the European Union.
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