Amortization and market value are the two most common methods for reporting asset valuations. Each accounting method has its advantages and disadvantages.
Amortization is an accounting method that deducts capital expenses over a certain time period, which is usually the asset’s lifetime.
Market value is the current price at which investors can buy or sell a share of common stock or a bond. Market value is also referred to as “market price,” according to Investopedia.
The Federal Accounting Standards Advisory Board sets the standard for reporting asset valuations. These standards are known as the Generally Accepted Accounting Principles, according to Investopedia. However, when investors analyze the value of securities, market value takes into account future growth potential, which differs from book value.
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