Mart -to- Market Accounting Essay Example | Topics and Well Written Essays - 250 words - 1

Mart -to- Market Accounting - Essay Example as been discussed and debated very thoroughly that the mark to market accounting is basically responsible for the creation of the current financial crisis. This method of accounting affected the value of the companies during the current financial crisis because with the crash in the property market, the values of the assets held by the firms also declined in their value. As per mark to market accounting procedures, firms were required to record their assets at new values and book the losses arising due to the reduction in the value of these assets. As a result of this, firms recorded heavy losses and their company values started to decline thus creating financial crisis. 3) It has been argued that the mark to market accounting does not work when markets are basically inactive and illiquid. (Katz). In such situation, it is therefore proposed that the rules regarding the mark to market process shall be suspended in order to provide more flexibility to the