Negative equity
This term refers to the law of the country selected below.
Czech Republic
What does negative equity mean?
Negative equity means that the company’s accounting liabilities exceed its accounting assets. If equity is depleted as a result of losses, this item must be reported as negative equity in the balance sheet of limited companies and silent partnership. Negative equity is generally determined on the basis of the annual financial statements. Reserves not recognised for tax purposes are not taken into account. When negative equity is reported, there is an obligation to carry out an insolvency test.
