ACC-1A Lecture Notes - Lecture 23: Historical Cost, Financial Statement, Net Present Value
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Document Summary
Historical cost concern that the method positions the financial statement too much in the past, where there are equally important needs to be recognise in market conditions and predict the future when making decisions. Asset whether market values may actually be better than historical cost, at least in some cases, such as for financial and monetary assets of financial institutions. Pv the likely future payments (if well into the future), rather. Historical cost aka acquisition cost values assets at the amount paid/promised to than just at the estimated cash outflow itself acquire the assets, and values liabilities at the amounts of any associated promises. Info found in transactional evidence e. g. invoices, receipts, contracts, etc. Ability to document cost of asset is a major reason why historical cost is the usual valuation method. Price-level-adjusted historical cost changes in values of particular assets. Adjusts for changes in the value/purchasing power of the dollar, rather than for.
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