Application of Historical Valuation Principles in Accounting

Historical cost, also known as actual cost, is the amount of cash or other equivalent actually paid for the acquisition or manufacture of a property. Under historical cost measurement, an asset is measured at the amount of cash or cash equivalents paid at the time of its acquisition, or at the fair value of the consideration paid for the acquisition of the asset. Liabilities are measured in terms of the amount of money or assets actually received by them as a result of the assumption of their current obligations, or the amount of contracts under which they assume their current obligations, or the amount of cash or cash equivalents expected to be paid in the ordinary course of their activities to meet the liabilities.

Pick A; Historical costs are actually incurred and are objective.

The principle of historical cost or the principle of actual cost requires that all economic operations and events should be recorded on the basis of the original cost, and the accounting should be based on the original cost. It is required that the valuation of assets and equity shall be recorded in the actual amount of money invested and actually paid at the time of the occurrence of economic operations, and the cost of products shall also be calculated according to historical cost, so that all items in the accounting statement will inevitably be reflected at historical cost. The main reasons for pricing at historical cost are as follows:

1) Historical cost is the transaction determined by the buyer and seller in the process of buying and selling**. This transaction** is objective and reliable in the market (2) The historical cost more truly reflects the value of the asset at the time of acquisition. (3) Since the historical cost is relatively easy to determine, it is a valuation standard that can be verified, checked and controlled.

4) Valuation at original cost, that is, the ratio of income and expenses is based on actual transactions, so that the determination of net income is more real, objective and comparable.

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In the context of IAS, when to use the historical cost measurement method and when to use it.

Hello dear! I'm glad to answer for you. In the context of IAS, when to use the historical cost measurement method and when to use A:

Hello dear, the difference between the new accounting standards and the old accounting standards tends to be principle-oriented: Compared with accounting standards, the new accounting standards tend to be more principle-oriented and provide some implementation guidelines, and the financial personnel of enterprises need to make more judgments. Fair Value Measurement:

Under the old accounting standards, the measurement principle was generally the historical cost method; The new accounting standards introduce more fair value measurement requirements. International Financial Reporting Standards: The new accounting standards draw on the national financial reporting standards (NFRS) and achieve convergence with the national financial reporting standards; The guidelines for the opening of socks in the old town are quite different.

Answer]: Analysis] The attributes of accounting measurement include historical cost, replacement cost, net realizable value, present value and fair value. When an enterprise measures the accounting elements in the empty group, it shall select the corresponding measurement attributes in strict accordance with the rules and regulations.

In general, the measurement of accounting elements should be based on the historical cost measurement attribute.

According to the provisions of accounting principles:

10. The principle of historical cost. It means that the property and materials of the enterprise shall be valued according to the actual cost at the time of acquisition, and if there is a change in the price, its book value shall not be adjusted except for general special provisions. According to this principle, the assets of an enterprise should be recorded and valued on the basis of the cost on the date of acquisition, so it is called the historical cost principle.

Historical costs are not only the basis on which all assets are accounted for, but also the basis on which they are subsequently apportioned to costs. Under normal circumstances, this principle also applies to liabilities and owners' equity.

So your first question is yes, the historical cost principle is observed.

The impact on the accounting data is mainly in the case of large price fluctuations in the future, and the historical costs may not correspond to the current real situation and may not conform to the principle of authenticity. In the case of a sharp drop in prices, for example, if the inventory materials are not sold, it is not in line with the principle of prudence to calculate the original price.

Usually in this case, it is necessary to make an impairment provision for this type of substance at the current ** level. As a result, it will increase the cost of the current period and reduce the profit of the current period, on the contrary, in the case of price **, it is generally not dealt with to comply with the principle of prudence.