Hi Can some explain me what is ment by historical cost in FSA? -Janga
I would assume that historical cost is what you originally paid for the asset at purchase. This would contrast with market, or “fair” value which is what it is worth today.
Sure…thank u… So when we metion a product value in our financial statement’s which value should go in – is it the historical value (or) the present value?
It depends, but assets are recorded at their historical cost less accumulated depreciation. Some accounting standards do allow for market value, for instance securities, and also revaluations of PPE. However, accounting and financial statements are largely based on historical information.
Financial statement mostly are recorded on historical cost. However, things like Fixed asset, it are required to be stated at its fair value where impairment losses come in where any different between historical cost and its fair value. Revaluation will also help to stating fixed asset at fair value. For those securities, they have different kind of treatments- namely HTM, AFS or trading. Some of them are required to be stated at market value, some are recorded at hostorical value based the intention of holding it.
historical cost is basically acquisition cost that includes transportation and installation costs that put the asset to its location and into use.