What does market value acounting mean?

Question

Thank YOU!

Answer 1

For companies with assets where there is an established market, such as securities like stocks, bonds, futures, commodities etc the assets are marked to market.  Or carried on the books at market value.  Other businesses with plant and equipment assets use book value accounting.  Assets are carried on the books at their original price minus depreciation or amortization.

Answer 2

Market value accounting reflects the valuation of marketable securities based on the current market value, rather than the cost basis, which has been the more  traditional way these assets have been valued on company books.

The effect tends to expose gains, if any, otherwise deferred by reporting only the cost basis of an asset, unless it were in fact sold during the reporting period, which increases near term tax exposure at least.

Answer 3

I can only give you a response based on the securities industry's accepted accounting practices

Assets are carried on the books at their current market value,

The cost price is reduced/increased to the market value, with the offsetting entry being either unrealized gain/loss or realized gain/loss.

In the securities business, securities carried on the books are adjusted to their market value with the off-setting entry being unrealized gain/loss