Final answer:
Companies maintain accounting records that show assets at the amount of their market value because it is more relevant than the historical cost. The market value represents the current worth of an asset, which is a more accurate reflection of its economic value.
Step-by-step explanation:
Companies maintain accounting records that show assets at the amount of their market value because that information is more relevant than the historical cost. The market value represents the current worth of an asset, which is a more accurate reflection of its economic value. Historical cost, on the other hand, is the original amount paid for an asset, which may not reflect its current value due to factors such as inflation, market fluctuations, and technological advancements.
For example, let's say a company purchased a piece of machinery five years ago for $10,000. Since then, the market value of similar machinery has increased to $15,000. If the company were to report the asset at historical cost, it would not accurately represent the current value of the machinery. By maintaining accounting records that show the asset at its market value, the company can provide stakeholders with a more relevant and informative picture of its financial position.