Friday, January 1, 2010

(66)-THE SEPARATE VALUATION PRINCIPLE

The Separate Valuation Principle

The separate valuation concept states that, in determining the amount to be attributed to an asset or liability in the balance sheet, each component item of the asset or liability must be determined separately.

These separate valuations must then be aggregated to arrive at the balance sheet figure.

For example, If a company’s stock comprises 50 separate items, a valuation must be arrive at for each item separately; the 50 figures must then be aggregated and the total is the stock figure which should appear in the balance sheet.

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