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Why is the share capital in the balance sheet always presented at the nominal value and not market value? What is the logical reasoning behind this?
Thank You.
The purpose of the Statement of Financial Position (we stopped calling it the Balance Sheet many years ago) is not to show the true value of the business or the worth of the shares. It is simply to show the assets and liabilities of the business.
The value of the business (and the shares) will change from day to day.This is all explained in our free lectures. The lectures are a complete free course for Paper F3 and cover everything needed to be able to pass the exam well.
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