Asset Sales

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DEFINITION of 'Asset Sales'

A sale of bank receivables by a bank to another party. Asset sales are often accomplished through the sales of individual loans or pools of whole loans. Asset sales are nonrecourse sales that are also sometimes accomplished through the securitization of the bank's receivables. These types of transactions are used to mitigate asset-related risk, obtain free-cash flows and for liquidation requirements, among other reasons.

INVESTOPEDIA EXPLAINS 'Asset Sales'

Asset sales are a complex transaction from an accounting perspective. An asset sale is classified as such if the seller gives the buyer control of the property after payment is made. There cannot be further recourse to the buyer; this characteristic will cause the transaction to be regarded as financing.

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RELATED FAQS
  1. What happens if a company doesn't think it will collect on some of its receivables?

    The accounts receivable account, or receivables for short, is created when a company extends credit to a customer based on ... Read Full Answer >>
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