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Valuation Principles/Bases


Historical Cost : If Asset is valued on Acquisition/Purchase Cost called Historical Cost 

Current Cost : 
The current mkt. value of the same model of the Asset, if purchased new from market.

Realisable Value : 
The realisable value of the Asset, if sold in the market in an ordinary disposal.

 

Present Value : Sum of Present discounted value of future expected earnings from the Asset.       
 

But accountants traditionally prefers Historical Cost basis because it is highly objective & free from all bias.






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