esindusväärtus

Esindusväärtus is an Estonian term that translates to "representative value" or "fair value" in English. It refers to the price at which an asset or liability could be exchanged between knowledgeable, willing parties in an arm's length transaction. This concept is crucial in accounting and finance, particularly in financial reporting.

The objective of reporting an asset or liability at its esindusväärtus is to provide users of financial statements with information that is relevant and faithfully represents the economic reality of the entity's transactions and balances. It is distinct from historical cost, which is the original purchase price of an asset. Esindusväärtus aims to reflect current market conditions and expectations.

Determining esindusväärtus often involves using market prices for identical or similar assets and liabilities. If active markets are not available, valuation techniques such as discounted cash flow analysis or the valuation of comparable assets might be employed. The specific methods used should be consistently applied and adequately disclosed in the financial statements to ensure transparency and comparability.

The application of esindusväärtus is particularly relevant for certain financial instruments, investment properties, and biological assets. It is a key principle in various accounting standards, including International Financial Reporting Standards (IFRS) and Estonian Generally Accepted Accounting Principles (Estonian GAAP), aimed at enhancing the quality and relevance of financial information.