A vessel can have an economic life of approximately 25 years or more. It is presented on a company’s statement of financial position as a non-current asset and is usually collateralized so that the company can raise funds by means of a loan from a financial institution.

For a vessel-owning company, the vessel is the most substantial and valuable part of the total assets within the statement of financial position. Essentially, for the financial statements to present a true and fair view of the company’s financial position as at the year-end date, the carrying amount of its vessel should be fairly stated.

Debt restructuring and refinancing arrangements are very common in the maritime industry especially in the current economic climate. For a vessel-owning company, the outstanding debt is substantially the biggest liability on the face of the statement of financial position.

Article by Pinelopi Kassani, Partner - Governance Risk & Compliance at Moore Greece, in Naftika Chronika.

Interview by Costas Constantinou, Managing Partner at Moore Greece and Global Maritime Leader at Moore Global, in the ELNAVI magazine.