The historical cost principle is an accounting principle that is related to the qualitative characteristic of reliability. A definition of this principle is that all transactions are recorded at their original cost or purchase price and must be shown in the firm's accounting reports at this historical price at all times. This means that assets are not revalued to their current market value but are maintained at their original costs. A question we need to ask is whether this principle is appropriate for all assets. For example, inventory or stock may decrease in value over time. For instance, if I have summer swimwear and it's now winter, I will probably have to lower the price of that. So historical cost might not be appropriate for inventory. On the other hand, a debtor's balance, the amount they owe me, is something that will probably remain constant, so I will keep that at its historical cost. In Australia, property prices generally go up over time so it may not make sense to not revalue property and the historical cost principle may not apply in such cases. The value of shares changes every day and vehicles may go down over time as they depreciate. So we need to consider if historical cost is the most appropriate principle to apply in these situations. Let's look at art as an example. Take the Mona Lisa, painted by DaVinci many years ago and bought by the king of France for 4,000 currency that doesn't exist anymore. In the early 1800s, it went to the Louvre and has remained there. If we do an equivalency calculation, 4,000 new cos is approximately $190,000. Using the historical cost principle, the Louvre should record the Mona Lisa as an asset for $190,000. But is that the most relevant value? We...
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Force account historical cost summary Form: What You Should Know
Equipment Total 1,380.43.00 #2 Maintenance — Equipment Total 1,270.48.00 #3 Labor and other equipment — Station/Station Supplies 1,094.00.00 #4 Labor & other equipment — Other Equipment 873.44.00 #5 Materials 1,180.35.00 #6 Maintenance — Supplies 957.40.00 #7 Other Total 1,749.00.31 #8 Miscellaneous — Station Supplies 0.00 #9 Misc. — Depreciation 0.00 #10 Miscellaneous — Equipment (includes labor) 0.00 #11 Miscellaneous — Other 0.00 #12 Total 9,096.30.00 #13 Cost of Ownership 2,867.24.01 #14 Total 9,159.29.01 #15 Cost of Goods Sold 2,957.00.40 #16 Total 8,898.90.42 #17 Cost of Taxes 2,846.36.10 #18 Total 8,621.06.02 #19 Cost of Interest 4,068.28.20 #20 Total 9,157.09.60 #21 Other 1,891.05.35 #22 Total 8,809.03.
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