If the market value of a company's assets is greater than the book value of a company's assets then the book value of the company's liabilities and equity must be less than the market value of the company's liabilities and equity.

Question

Quizplus · Accepted Answer

This statement is true according to the accounting equation which is Assets = Liabilities + Equity. If the market value of assets is greater than their book value, then the total equity of the company will be higher than the value stated in the financial statements, which means that the market value of both liabilities and equity will also be greater than their book value.

If the Market Value of a Company's Assets Is Greater