Historical Cost Concept in Accounting
For example the cost of the building and land plus payments to a realtor and attorney to close the sale. The current market value of the machine in its present condition is 6000. Types Of Costs And Their Classification Cost Accounting Money Management Accounting Basics This concept is clarified by the cost principle which states that you should only record an asset liability or equity investment at its original. . Consequently the amounts reported for these balance sheet items often differ from their current economic or market values. The historical cost concept is grounded on the going concern assumption of accounting. Under the historical cost principle often referred to as the cost principle the value of an asset on the balance sheet should reflect the initial purchase price as opposed to the market value. Ad Over 27000 video lessons and other resources youre guaranteed to find what you need. As one of the most fundamen...