Question

Difference between replacement cost and historical cost

Answer 1

Answer:

Explanation:

The historical cost of an asset refers to the actual cost incurred at the time the asset was acquired. In contrast, the replacement cost stands for the cost which must be incurred if the asset is to be purchased today. ... Conventionally, balance sheets are cast on the basis of historical costs.

Answer 2

Answer:

The historical cost of an asset refers to the actual cost incurred at the time the asset was acquired. In contrast, the replacement cost stands for the cost which must be incurred if the asset is to be purchased today. The two concepts differ due to price variations over time.