Replacement Cost Accounting

Replacement cost accounting

An accounting method that includes as part of depreciation the difference between the original purchase price of an asset and the current replacement cost.

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replacement cost accounting

An accounting system that values assets and liabilities according to their replacement cost rather than their historical cost. Replacement cost accounting incorporates the effects of changing prices and the resultant changing values of the items that are listed in a firm's financial statements.

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Replacement Cost Accounting

An accounting practice in which liabilities and assets are recorded on a balance sheet according to the cost of replacing them, rather than the original amount spent on the liabilities or assets. This practice is intended to take into account current prices when calculating a company's value. It is the opposite of historic cost accounting.