Historical Cost vs, fair value vs historical cost essay.
Summary of HISTORIC COST VERSUS FAIR VALUE In accounting historical cost is the original or nominal amount of money paid for asset rather than inflation adjusted price. In other words it is the resource given up or a liability incurred to acquire an asset.
Historical Cost vs. Fair Value Robert E. Healy’s Lasting Mark on Our Profession By Guest blogger, John D Rossi III, CPA Accounting standards in the United States have traditionally been based on historical cost. Not so well known, however, is that the use of historical cost accounting can be traced to the Securities and Exchange Commission.
Fair Value Accounting vs. Historical Cost Accounting Dane Brown Team Members: Luis Grisales and Lorena Gonzales Carlos Albizu University Currently, although Fair Value Accounting (FVA) method and Historical Value Method (HVM) are acceptable method of accounting practice in the U.S. by both The International Standards Board (IASB) and Financial Accounting Standard Board (FASB), fair value.
Historical cost reflects the real value of items at the date of their entering the company. Historical cost is truly more sure, reliable and checkable value. For asset it is the amount paid or to be paid and in case of debt it is the value of equivalents obtained in exchange of obligation or the value to be paid in cash or cash equivalents to settle the debt.
Download file to see previous pages (Pita and Gutierrez, 2006) Hence, the fair value of an asset or liability best estimates the market value of an asset or liability. The historical cost is defined as the original monetary value of an asset or liability. (Nikolai, Bazley and Jones, 2009) The accounting procedure that pertains to the use of the historical costs includes the use of the original.
Historical vs. Fair Value Academic Essay. The students should write an article comparing between the use of the fair value which is adopted by the IFRS and the historical cost which is adopted by the US GAAP. The comparison should cover all the required areas and the implications of adopting any of these concepts on the financial statements.
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