Historical cost and current cost accounting
Historical cost accounting 同 Current cost accounting 系乜來咖？點分？
甘current cost accounting la ??
- ?Lv 61 decade agoFavorite Answer
In accounting, the historical cost principle dictates that most assets and liabilities should be recorded at their historical cost.
valuing assets at current replacement cost: a method of accounting that assesses the value of assets as the cost of replacing them rather than as their original cost
Nowadays, almost all the accounting standards require the cost to be recognised in historic cost. For example, a tract of land which was purchased 50 years ago for $10,000 may be worth $1 million today but it will be recorded on the balance sheet at its historical cost: $10,000. Historical cost principle is used because of its reliability and freedom of bias when compared to fair market value principle. However, historical cost does not always provide relevant information. Thus there is an increasing pressure to use fair market value. Today most securities and debts are recorded at market value. In contrast to US GAAP, under UK GAAP firms may revalue assets based on appraised market values. This can result in the recognition of unrealized gains as income.