As per the Accounting Standard 13, non-current assets/long-term investments are measured at their purchase prices. Since the outlook for non-current assets is long, they are not adjusted for gains/losses as per their fair values/market prices in the balance sheet at the end of each year. A permanent reduction in the market value is only accounted for.

Due to this principle, in the companies in which investments form a sizable portion of the total assets, if the market value of investments is less than the book value, then the book value remains inflated.

We compared the book values of investments of some companies with the current market values of those investments and found that in certain companies the current market prices of the investments are below the book values of those investments. We also found what percentage such assets are of the total assets. The inquiry revealed the names of the companies given alongside. Long-term investments made by these companies have lost their value over time, but the balance sheets of these companies still record the original inflated book values. Such inflated book values may obscure the reality about the balance sheet strength of these companies. The impact will be, obviously, more pronounced in the companies where the inflated investments also make a significant portion of the total assets.