Monday, Oct. 06, 2008

Mark to Market

Definition: A method of accounting that values assets based on what comparable assets are worth in the open market. Many have blamed mark-to-market accounting rules for deepening the economic crisis because when failing companies are forced to unload their securities at bargain-basement prices, similar assets go down in value across the industry. The new financial rescue plan passed by Congress gives the SEC the authority to suspend the practice.

Usage: "This arcane accounting rule requires companies to write down the value of certain assets to their current market value—defined as the price that similar assets are fetching in an open market." (USA Today, Oct. 4, 2008)