It is possible to find the book value (purchase cost) of an investment firm’s assets if the firm uses historical cost accounting as follows:
bookValue = historicalNetAssetValue - accumulatedDepreciation
I am wondering if there is a formula to retrieve the purchase cost of a firm’s assets if the firm uses fair value accounting? I was initially thinking along the following lines:
bookValue = fairNetAssetValue - acccumulatedUnrealizedGainsLosses
where acccumulatedUnrealizedGainsLosses is the running sum of unrealized gains and losses reported in the firm’s income statement over a period of time.
Does this make sense? Can the formula be improved?
Thanks for any pointers.