1. Differentiate historical cost concept from the fair value cost concept of measurement. State clearly their...

90.2K

Verified Solution

Question

Accounting

1. Differentiate historical cost concept from the fair valuecost concept of measurement. State clearly their advantages anddisadvantages.

Answer & Explanation Solved by verified expert

4.2 Ratings (811 Votes)

The key differences between Historical Cost vs Fair Value are as follows Historical cost is the transaction price or the acquisition price at which asset was acquired or transaction was done while Fair value is the market price that asset can fetch from the counterparty As per Indian GAAP we are following historical based accounting However IFRS requires fair value based accounting Depreciation on the fixed asset is getting calculated on historical cost while Impairment on the assets is getting derived based on their fair value Professionals are needed for the fair value derivation while even Layman can derive the historical cost In the Balance sheet Property plant and equipment PPE are to be disclosed at Historical cost while Financial Instruments are to be disclosed at fair value Historical See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member