Accounting valuation process is the process of evaluating the assets of a firm or a business entity for a financial reporting purpose. The assets of the firm are evaluating by using a number of valuation techniques in order to analyze and report them in the financial statements. These valuation techniques are called as accounting evaluation methods. All these accounting valuation methods and techniques are stipulated by the accounting rules and regulations. For example in order to evaluate the options granted by the company to its employees it is evaluated by the accounting valuation techniques that have a well accepted option modal to evaluate the options. Some assets are only estimated with the amount of price paid for them as the price shows their value. The example of such assets is real estate.
Accounting valuation is an integral part of the financial accounting. With the help of accounting valuation we can make sure that the assets and being reported on the financial statements of the business entity and the firms are true to core and are reliable. This means that the investors and other companies can rely on the financial statements to inquire about the values of the asset of a company. Analysis of the valuation is also very important as it must be evaluated that valuation is done with accuracy and efficiency. For example in case of some assets such as real estate the valuation of real estate is far from the true value of the real estate as it also involves cost less depreciation for determining its value.
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