replacement cost
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Related to replacement cost: Replacement cost accounting, Replacement cost insurance
Replacement cost
Replacement Value
The cost of replacing an asset in the case that it is damaged or destroyed. That is, the replacement value changes according to the market value of the asset. An individual or company may buy a replacement cost insurance policy to cover the replacement value. It is also called the replacement cost.
replacement cost
The current cost of replacing an asset with an equivalent asset.
replacement cost
the cost of replacing a FIXED ASSET (such as an item of machinery) or STOCK. Unlike HISTORIC COST – the original cost of acquiring an asset – replacement cost makes due allowance for the effects of INFLATION in increasing asset prices over time. Prudence requires that stocks are valued in a company's accounts at historic or replacement cost, whichever is the lower. See also REVALUATION PROVISION, INFLATION ACCOUNTING, APPRECIATION, definition 1.replacement cost
the cost of replacing an ASSET (such as an item of machinery). Unlike HISTORIC COST - the original cost of acquiring an asset - replacement cost makes due allowance for the effects of INFLATION in increasing asset prices over time. See also INFLATION ACCOUNTING, APPRECIATION 2.replacement cost
(1) In appraisal,the cost to erect a new building substantially similar to the current one. (2) In insurance,the cost to purchase a new item substantially similar to the one damaged, destroyed,or stolen. Contrast with fair market value.