The Mirage of Book Values

As per the Accounting Standard 13, non-current assets/long-term investments are measured at their purchase prices. Since the outlook for non-current assets is long, they are not adjusted for gains/losses as per their fair values/market prices in the balance sheet at the end of each year. A permanent reduction in the market value is only accounted for. Due to this principle, in the companies in which investments form a sizable portion of the total assets, if the market value of investments is less than the book value, then the book value remains inflated. We compared the book values of investments of some companies with the current market values of those investments and f