Question

Are long-term Assets valued at their market value? If so, why? If not, why?

Answer 1

Long-term assets are NOT valued at their market value and they are always recorded at the cost at which they are purchased because these long-term assets will not be having liquidity and they are not traded in the market in order to find their true market value and it is brought with the motive of not selling them and using them for their entire life so they will always be sold in order to find out the true market value and hence it can be said that these assets has been acquired for a longer period of time so they are adjusted with depreciation rate in order to keep their valuation in check but they cannot be valued at the market value because of their lower liquidity and lack of tradability in the market .

Long-term assets are highly liquid and they are not traded in the market and they are only sold at a point of time after their use, so they are also required for a longer period of time and with the motive of not selling them and hence it can be said that these assets have a lower ability in order to regularly discover their true market value and hence they will be valued at the book value in their books of accounts.