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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
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The report added: "The maximum annual accounting cost of the CEO's remuneration is [euro]2.8million over the five-year term, comprising of base pay of [euro]500,000 per annum, maximum performance bonus of up to [euro]500,000 per annum and a [euro]1.8million charge for 10million share options granted."
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With a relative TSR award, the number of shares that the employee will receive varies, depending on actual relative performance; however, the accounting cost to the company remains fixed throughout the term of the award.
It is important to establish standard accounting cost codes and standard common denominators to be used in preparing job estimating.
Although marginal economic cost is theoretically preferable to average accounting cost as a basis for reimbursement, there are important practical difficulties in estimating it.
It has estimated that the initiatives could reduce the scheme liabilities by approximately GBP50m and could incur a one-off accounting cost of about GBP6.0m, to be expensed in 2012.
But the problem is, we don't know how that cost is determined, except to say it's some historical accounting cost and not the true cost of providing an incremental slug of the capacity.
The accounting cost of $.75 is based on the number of vendors required to support the product.

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