When determining unrestricted net assets with the Unrestricted Net Asset Tool, why is long-term debt associated with fixed assets added back?
This type of long-term debt is offset against the undepreciated balance of fixed assets (the amount carried as an asset on the balance sheet) because it recognizes that long-term debt is a structural component of financing capital assets. The types of debt that are associated with fixed assets that may be offset in the tool include mortgages and bonds collateralized by the assets of the organization, including property. Capital leases for equipment purchases are both assets and liabilities of an organization, and thus can be eliminated from the calculation of net assets invested in property. Inappropriate forms of debt to add back in the tool include short term liabilities such as accounts payable and accrued interest. They are insignificant in the calculation, as they are often small, relative to the size of total fixed assets, and they are not true long-term debt. In the rare instance where building-related payables are material, the implications of severe cash flow difficulties rais