what do you mean by historical cost concept
Answers
Explanation:
A historical cost is a measure of value used in accounting in which the value of an asset on the balance sheet is recorded at its original cost when acquired by the company. The historical cost method is used for fixed assets in the United States under generally accepted accounting principles (GAAP
Answer:
Question :
Answer :
What Is a Historical Cost?
A historical cost is a measure of value used in accounting in which the value of an asset on the balance sheet is recorded at its original cost when acquired by the company. The historical cost method is used for fixed assets in the United States under generally accepted accounting principles (GAAP).
Understanding Historical Cost
The historical cost principle is a basic accounting principle under U.S. GAAP. Under the historical cost principle, most assets are to be recorded on the balance sheet at their historical cost even if they have significantly increased in value over time. Not all assets are held at historical cost. For example, marketable securities are recorded at their fair market value on the balance sheet, and impaired intangible assets are written down from historical cost to their fair market value.
KEY TAKEAWAYS
- Most long-term assets are recorded at their historical cost on a company's balance sheet.
- Historical cost is one of the basic accounting principles laid out under generally accepted accounting principles (GAAP).
- Historical cost is in line with conservative accounting, as it prevents overstating the value of an asset.
Explanation:
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