Author(s): Sophie Muller
Mark-to-market accounts, or fair value accounting, is a method of valuing assets and liabilities based on current market prices. While this approach aims to reflect real-time values, it also introduces potential volatility into financial statements, especially during market downturns or periods of economic uncertainty. This article explores the principles of mark-to-market accounting, its impact on asset valuation, and the role it plays in market volatility. By examining both the benefits and challenges associated with this method, we gain insight into how it affects stakeholders and financial stability. The article concludes with considerations for companies, regulators, and investors in managing the effects of fair value accounting.