Valuation in accounting is a common procedure used to determine the value of an asset for the purposes of financial reporting. This may seem like a relatively simple task overall, but assessing the present value (PV) of certain types of assets can require advanced calculations and thorough understanding of applicable regulations.As with most business accounting practices, there are established standards and regulations that determine how value is determined and reported. However, accountants performing the valuation have several distinct methods they can use depending on the demands of the situation.
There are many reasons for an individual or business to get an accounting valuation of some or all of their assets. Larger business conduct broad valuations during mergers or acquisitions to ensure that the numbers used in a contract are accurate. Determining the value of an individual's assets is also necessary when dividing property among beneficiaries of a will or during a divorce settlement. It can also be necessary for those required to forfeit assets as a result of a a civil claim or as part of bankruptcy proceedings.