ACCA Applied Knowledge · Financial Accounting · Key principles and concepts of accounting
Which measurement basis values an asset at the amount that would be paid to acquire an equivalent asset today, rather than the price originally paid?
Current cost is the basis that values an asset at what it would cost today to acquire an equivalent asset. Historical cost instead uses the original purchase price, realisable value uses sale proceeds, and present value discounts future cash flows, so only current cost matches the description.
- AHistorical cost
- BCurrent costCorrect
- CRealisable value
- DPresent value
Explanation
Current cost measures an asset at what it would cost to acquire an equivalent asset now. Historical cost uses the original price paid. Realisable value looks at the sale proceeds, and present value discounts expected future cash flows.
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