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'Mark to Market' Accounting Rule

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The 'Mark to Market' Accounting Rule: What it is and why it is important to you now!

Why does 'Mark to Market' exist?

So how does this principle apply to banks?

Fixing the Problem (current finanical crisis)?

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The response addresses the queries posted in 723 Words, APA References

'Mark to Market' Accounting Rule

'Mark to Market' accounting rule is defined as the reporting methodological analysis, which puts up the value of the total assets or bonds that are mentioned in the company's balance sheet, in order to reflect their current market sale value (Dumortier, 2008).This accounting rule mainly necessitates that all assets, loans, securities, bonds, etc. are evaluated at their current value, so that it will fulfill it's aimed of sustaining company's books of financial record or accounts on up and up.

In simple terms, it is the act of entering or journalizing the cost or value of a security, portfolio, bonds, etc. in order to shows its current market value, instead of its original value. For example: Suppose an individual possesses 50 shares of stock at $20 each, but now stock of shares are at $40 each. In this condition, 'mark to market' value of the shares is $2000 (50 shares*$40) and book value is equal to the value of $1000 (50 shares*$20). If the value of stock falls i.e. $10, then in this condition, mark to market value will be about $500 (50 shares*$10), it implies that capitalist has suffered a loss i.e. about $500 from the initial ...

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The response addresses the queries posted in 723 Words, APA References