Historical Cost.
Options
A
B
C
D
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Theoretical FrameworkQ-1 | Accounting as a Measurement DisciplineQuestion 4981 of 110
All Questions Correct Answer
✅ Option — Correct Option
All Options:
- A
- B
- C
- D
Detailed Solution & Explanation
## Historical Cost
* It means acquisition price.
* According to this base, assets are recorded at an amount of cash or cash equivalent paid or the fair value of consideration given at the time of acquisition.
* Liabilities are recorded at the amount of proceeds received in exchange for the obligation. In some circumstances a liability is recorded at the amount of cash or cash equivalent expected to be paid to satisfy it in the normal course of business.
### Example: 1. On 1.1.2005, a businessman 'Ram' paid 5,00,000 to purchase the building, its acquisition price 5,00,000 is the historical cost of building. 2. Loan taken from Bank 4,00,000@ 15%, the liability will be recorded at the proceeds received 4,00,000.
### Example: 1. On 1.1.2005, a businessman 'Ram' paid 5,00,000 to purchase the building, its acquisition price 5,00,000 is the historical cost of building. 2. Loan taken from Bank 4,00,000@ 15%, the liability will be recorded at the proceeds received 4,00,000.
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