Question

Q 2.16: according to the historical cost principle, if an asset costs $50,000 when it was purchased, it would be recorded at its ________ over the time the asset is held.

Answer 1

According to the historical cost principle, if an asset costs $50,000 when it was purchased, and the one who purchased it still owns the asset today, it will have a higher value than $50,000. If the interest rate is assumed to be 5% for 5 years, the asset will be recorded as $63,814.08.