Rules of Valuation and Presentation of Assets in Balance Sheets

Social, economic and legal factors resulted in differences in the financial statements from one country to another. These factors have contributed to use different criteria to recognize the structure of financial statements and the option for different bases of valuation. They also affect the scope and disclosures in the financial statements. Committee IASC is employed in mitigating these differences and seeks to harmonize regulations, standards and procedures for preparing and presenting financial statements. Harmonization requires that financial statements provide useful information for making economic decisions. The elements in balance sheets are recognized according to four basic criteria: definition, measurable character, relevance, reliability. The valuation of the elements in balance sheets is one of the most difficult accounting issues. The elements presented in financial statements are valued using the rules of „historical cost” or basic accounting procedures. The issue of the valuation of items that are an entity’s assets has been analysed in many studies and various opinions have been expressed, some of them transforming into real balance sheet theories. The difficulties encountered when it comes to establishing “definitive” valuation rules are generated by the aim pursued: the faithful image of assets or the user’s interest. The elements presented in financial statements are valued according to the provisions of the regulations in force, the Accounting regulations in accordance with the Fourth Directive of the European Economic Community and the International Accounting Standards, after the rules of „historical cost” or basic accounting procedures.