julio has a house worth $220,000. he has a $175,000 mortgage. julio says that in this situation, his asset…

julio has a house worth $220,000. he has a $175,000 mortgage. julio says that in this situation, his asset equity is really only $45,000. which statement explains whether julio is correct? julio is correct because the $45,000 equity in the house is the real asset. julio is correct because he can pay $45,000 and have no more liabilities. julio is not correct because the same item cannot represent both an asset and a liability. julio is not correct because the house cannot be worth more than the mortgage.

julio has a house worth $220,000. he has a $175,000 mortgage. julio says that in this situation, his asset equity is really only $45,000. which statement explains whether julio is correct? julio is correct because the $45,000 equity in the house is the real asset. julio is correct because he can pay $45,000 and have no more liabilities. julio is not correct because the same item cannot represent both an asset and a liability. julio is not correct because the house cannot be worth more than the mortgage.

Answer

Brief Explanations:

Asset - equity is calculated as the value of the asset minus the amount of debt (mortgage). Here, the house value ($220,000) minus the mortgage ($175,000) gives $45,000. This $45,000 represents the owner - occupied portion of the asset, which is the real asset.

Answer:

Julio is correct because the $45,000 equity in the house is the real asset.