Floating assets are valued at

Floating assets are current assets like stock or inventory that change regularly. These are valued either at cost price or market price whichever is lower. This rule ensures that financial statements are not overstated and gives a safe margin to investors. For example if stock was purchased for 50000 but market value is 45000 it must be recorded at 45000. This conservative principle protects stakeholders from misleading financial data. It also reflects the true financial condition of a business. Thus valuing floating assets conservatively is an essential accounting practice used worldwide.