What is the real value?

The real value is that economic term that refers to the price of a good, a service or a title in the market. The particularity of the real value is that when calculating the cost of the goods, services or titles takes into account all those elements that affect the asset, whether tangible or intangible.

In the financial market, the real value consists of what an investor is willing to pay for an asset, knowing all the information that affects said asset. Typically, the asset whose real value is easiest to know are the actions, since in other cases there is information that cannot be known for sure, so the concept of real value cannot be applied to it.

How the actual value is calculated

The real value is obtained as a result of subtracting the depreciation that the specific asset may have suffered due to time, use or conservation from the New Value. After deducting that monetary wear at asset, we get the real value.

In fact, this is why the price shown in the markets is considered to be the real value, which is why in many areas they are considered a reliable indicator. It is not surprising, therefore, that market prices, and therefore real value, are the way of valuing assets in accounting.

How is the real value different from the nominal value?

While the real value is the price paid for an asset, the Nominal value It is the price that is initially attributed to said asset. The difference that exists between one and the other will serve to know under what conditions the asset has been acquired:

  • At par: it means that the real value of the acquired asset was equal to its nominal value
  • Over par: when the actual value is higher than the nominal value
  • Under par: occurs when the real value is less than the nominal value of the asset.

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