ACC 281 Week 2 DQ 2 Explain the historical cost concept as it applies to long term operational assets
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ACC 281 Week 2 DQ 2
Explain the historical cost concept as it applies to long-term operational assets.
The historical cost concept refers to the long-term operational assets be documented at the amount in which they are paid for.This amount will show on the balance sheet as long as the asset is owned. In time, the asset may rise or even decrease in value, but this variation is not reflected on the accounts of the business.The historical cost of assets can be reduced due to depreciation over time. According to Edmonds (2010), "The historical cost concept requires that most assets be reported at the amount paid for them (their historical cost) regardless of increases in market value" (pg. 13).
Why is the book value of an asset likely to be different from the current market...
