Asked Dec 22, 2019

Distinguish between measuring assets based on current cost and historical cost.


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Historical cost: Historical cost can be defined as the original monetary value of an economic item. It is based on the constant measuring unit assumption. At times, the assets are recorded on its historic cost, if there is no change in value since the acquisition. This is the only reason that at certain times, the balance sheet value of the item may differ from the actual value. Current cost: Current cost can be defined as the amount currently paid to purchase an asset or the amount equals to replace an asset at this time.


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