historic cost
Historical Cost
historic cost
the original cost of purchasing an ASSET (such as an item of machinery). For accountancy purposes, the asset is entered in a firm's BALANCE SHEET at historic cost. However, allowance has to be made for the REPLACEMENT COST of the asset which, because of INFLATION, may well be considerably greater than the original price paid. Thus, DEPRECIATION provisions which are generally based on the historic cost of assets may be inadequate in a period of rapidly rising prices. See INFLATION ACCOUNTING, MARKET VALUE.historic cost
the original cost of purchasing an ASSET (such as an item of machinery). For accountancy purposes, the asset is entered in a firm's BALANCE SHEET at historic cost. However, allowance has to be made for the REPLACEMENT COST of the asset, which, because of INFLATION, may well be considerably greater than the original price paid. Thus, DEPRECIATION provisions may be inadequate in a period of rapidly rising prices. See INFLATION ACCOUNTING.historic cost
The cost of a structure when it was first built.Contrast with original cost,which is the price paid by the current owner.