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 ?
Once a company has chosen this policy, it may continue to carry its assets at historical cost (less accumulated depreciation and impairment losses), no matter how much they increase in value.
The participants in the survey had very different opinions on the fact that most companies use historical cost as valuation base in their accounting, as half of them found this to be a normal thing and the other half dismissed it as abnormal, since historical cost doesn't reflect the prices applicable at the date when the financial statements are prepared.
Historical cost records documenting development of the know-how, including:
Current cost figures of net assets are higher than historical cost or constant dollar figures.
However, companies had been given the 'historical cost or fair value' option for now because so many domestic accounting standards still operated in tandem with the historical cost principle.
We continue to see news stories about charges of earnings manipulation, even under the historical cost accounting framework.
accounting methodology, anchored firmly on historical cost information.
The predicted future risk metric and historical cost metrics can be expressed in terms of "x" and "y" coordinates on a scatter-plot with the vertical axis representing future predicted risk and the horizontal axis representing historical cost.
Now proponents of fair value accounting not only have to argue that "fair value" is more relevant than historical cost, but they also have to specify which fair value.
The advantages of this method--and the corresponding weaknesses of historical cost accounting--are described in more detail in "Accounting for Financial Assets and Financial Liabilities," a discussion paper published by the International Accounting Standards Committee (IASC) in March 1997.

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