Historical Cost

History, principle, valuation process, advantages

http://www.academia.edu/254573/Historical_Cost_Accounting_Versus_Current_Cost_Accounting

History

Principle-

Advantages

Disadvantages,

Constraints

Effects on depreciation, tax and dividend

It represents the updated value to the investors and shareholders.

According to IASB fair value act as the amount at which an asset can be transacted or a debt can be settled on mutual agreement where price is objectively determined.

Conclurion:The concept of historical cost is important because market values change so often that allowing reporting of assets and liabilities at current values would distort the whole fabric of accounting, impair comparability[->0] and makes accounting information unreliable.

Concluiion or letter..The report provides with a summary of mainly three journals which are attached herewith, however, a few more journals were a helpful study in successful completion of this report. The main discussion areas of this report is the history and origin of the

At first the report provides light on historical cost concept. Secondly, it discusses fair value, den comparison, den conclusion.

Depreciation, tax, Dividend

Historical cost is a traditional method of recording assets and liabilities at their original or nominal value without making adjustments for inflation. It first came in evidence in Jun 1979 in a French project after numerous debates. The historical cost principle states that the asset should include all cost necessary to get the asset in place and ready for use. The principle of historical cost is based upon two fundamental principles: the principle of monetary standardization and principle of prudence. The principle of monetary standardization ignores the fluctuations in monetary values of asset and liability. The principle of prudence accounts only the losses but ignores potential profit. Assets are evaluated based on acquiring cost, stock is evaluated based on net realizable value...