Money & Banking Accounting Rule 2: Valuation Principle

Financial instruments might be booked at cost of acquisition, at face value (nominal value), or at a market-related value.

The procedure when presenting Money and Banking Statistics in the IFS is to value financial assets at the present discounted value of future payments and to price financial liabilities at face value. Thus, it is assumed that debtors and creditors may have different perspectives concerning the value or cost of a financial instrument, with creditors focusing on present values and debtors on eventual costs. The system therefor allows for different valuation of the same item in the debtor's and creditor's balance sheets.

In practice, relatively few modifications to national valuation practices are made. This is due to lack of additional data and information on a regular and current basis as necessary to move from one valuation procedure to another. However, effort is done to determine national valuation procedures in order to identify how these differ from the preferred ones.

Financial instruments denominated in foreign currency must be converted to national currency equivalents for balance sheet purposes. The preferred practice is to convert all foreign currency items using the relevant exchange rates prevailing on the date of the balance sheet.
However, when balance sheets use cost of acquisition valuation procedures for booking assets, the foreign currency cost of acquisition should be converted to national currency using prevailing acquisition exchange rates.

All transactions between the IMF and its member countries are denominated in SDRs. Prevailing rates of exchange between the SDR and the national currency are used to obtain national currency values for Fund-related accounts. Furthermore, national source data are replaced with the IMF’s own records (should be identical).
Gold holdings are, by the majority of countries, valued at historical official price. However, countries are free to value official holdings of gold at the prices they consider appropriate, and a number of countries have adopted new gold valuation procedures, usually based on gold prices in the private markets.