Types of Asset Measurement
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Created by:
alwayssunny on September 27, 2011
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5 terms
Terms | Definitions |
|---|---|
 Acquisition Cost (Historical Cost) | The Amount of cash paid (or the equivalent value of other forms of payment) to acquire an asset. Most assets are initially measured this way. |
| Current Replacement Cost | The amount a firm would have to pay to obtain another asset with identical serve potential. This is an "entry value". |
| Net Realizable Value | The net cash (selling price less selling costs) that the firm would receive if it sold the asset today, in orderly fashion in an arm's length transaction. This is an "exit value" because it reflects a price that the firm would receive in a transaction in which an asset leaves the firm. |
| Fair Value | The price that would be received to sell an asset (or paid to transfer a liability) in an orderly transaction between market participants at the measurement date. |
| Present Value of Future Net Cash Flows | The amount that results from using an appropriate interest rate to discount one or more future cash flows to the present. |
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