historical cost

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Historical cost

Describes the accounting cost carried in the books and reflecting the cost of the item at the time it was purchased, rather than its current value.

Historical Cost

In the Generally Accepted Accounting Principles, the original cost of an asset on a balance sheet. Many assets, particularly illiquid assets, are recorded on a balance sheet according to their historical cost. A notable exception to this rule is the recording of marketable securities, which are recorded according to their market value. The historical cost usually bears little or no relationship to the market value after an asset has been held for several years.

historical cost

The amount of money that was originally used to pay for an asset. A company records assets on a balance sheet at historical cost, which often bears little relation to the market value of the assets after they have been owned several years. Also called original cost.
References in periodicals archive ?
However, since real estate values have historically risen or fallen with market conditions, many industry investors deem presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves.
The difference between historical cost accounting and fair value accounting?
During most of the last century, standard setters emphasized historical cost accounting.
Over the past 30 years, the Financial Accounting Standards Board in the United States and the International Accounting Standards Board have been moving away from historical cost accounting and heading towards fair value accounting, which involves having companies prepare their balance sheets on the basis of what assets are worth today, as opposed to what they cost when they were acquired.
Historical cost accounting just doesn't work for this purpose (though it is probably better suited for financial institutions than for other firms in which fixed assets make up a large part of the portfolio).
Historical cost accounting methods hove been used, except where only current cost accounts have been filed.
We continue to see news stories about charges of earnings manipulation, even under the historical cost accounting framework.
Where Edwards and Bell may have segued rather than focused (and similar problems still exist) is the important intermediate point between historical cost accounting and estimates of the future--a point called "today.
3) This becomes increasingly important given the trend away from historical cost accounting and toward current value accounting.
In contrast, under historical cost accounting, changes in fair values are not recognized until realized.
Whole categories of assets are poorly measured through historical cost accounting," said Wallman.

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