1. Differentiate historical cost concept from the fair value
cost concept of measurement. State clearly their...
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Accounting
1. Differentiate historical cost concept from the fair valuecost concept of measurement. State clearly their advantages anddisadvantages.
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The key differences between Historical Cost vs Fair Value are as follows Historical cost is the transaction price or the acquisition price at which asset was acquired or transaction was done while Fair value is the market price that asset can fetch from the counterparty As per Indian GAAP we are following historical based accounting However IFRS requires fair value based accounting Depreciation on the fixed asset is getting calculated on historical cost while Impairment on the assets is getting derived based on their fair value Professionals are needed for the fair value derivation while even Layman can derive the historical cost In the Balance sheet Property plant and equipment PPE are to be disclosed at Historical cost while Financial Instruments are to be disclosed at fair value Historical
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