Question

. Companies usually record their assets on book values, and define
profitability and capitalization on market value. A general rise in stock
price of a company can increase overall market value of company.
Whereas, assets are subjected to depreciate at regular interval which
actually decrease market value of total assets. In such cases companies
usually see mismatch between asset and claim side of balance sheets. How
companies fill this game?
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Answer 1

Explanation:

In order to fill this game, the preferred practice is that the company uses market value of the stocks and assets while outlining its financial statement. The company would not use its book value because book value does not give the current value of stocks and assets.

Hence to fill the gap between asset and claim side of balance sheets, market values are taken