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The combined appraisal loss of shares held by major firms listed on the Tokyo Stock Exchange had more than halved to 1.2 trillion yen by Wednesday’s close of fiscal 1998 from 2.8 trillion yen on Sept. 30, a think tank said.

The figure concerns only listed nonfinancial firms that have adopted stricter accounting methods for assessing the value of their stockholdings. Under these methods, the value is based on whichever is lower of a share’s original acquisition price or its current market price, Daiwa Institute of Research said.

The appraisal loss is the discrepancy between the original purchase value of a share and its current market value when the market value is lower than the purchase value. The loss was collated on the basis of Wednesday’s closing figure for the 225-issue Nikkei stock average: 15,836.59, down 22.53 points.

The gauge’s closing level represents a 2,400-point advance over its closing level on Sept. 30. However, it signified a decline of 690.58 points from the end of the previous fiscal year on March 31, 1998.

If the combined latent loss of those TSE firms that have opted for the more lenient “purchase-cost method” is added to the 1.2 trillion yen loss, the loss tally would balloon to 2.4 trillion yen, the think tank said. The purchase-cost method allows its users to assess the value of their shareholdings based on their original acquisition prices, even when their current market value is much lower than the original acquisition value.

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