Theoretical FrameworkQ-1 | Accounting as a Measurement DisciplineQuestion 4981 of 110
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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.

About This Chapter: Theoretical Framework

Paper

Paper 1: Accounting

Weightage

5-10%

Key Topics

Policies, Standards (Ind AS), Vocabulary

This chapter covers Policies, Standards (Ind AS), Vocabulary and is part of Paper 1: Accounting in the CA Foundation exam.

View Official ICAI Syllabus

Exam Strategy Tip

This topic carries 5-10% weightage. Focus on understanding core concepts rather than memorizing.

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