Current cost and Replacement cost

Accountancy

Are these costs same or do they differ from each other? Pls explain with an example.

Sibi Srinivasan

CA Final

★ 22K+

10-Mar-22 20:33

720

Answers (6)

In what context are you asking this

Sudha Reddy

CA Final

★ 20K+

11-Mar-22 11:29

General context mam

Thread Starter

Sibi Srinivasan

CA Final

★ 22K+

11-Mar-22 11:39

Current cost is the present cost acquiring an asset Replacement cost is the cost of replacing the present asset with a similar new asset from the market. Replacement cost is always in relation to an old existing asset.

Sudha Reddy

CA Final

★ 20K+

11-Mar-22 14:37

Ok mam. Pls explain replacement cost alone with an example.

Thread Starter

Sibi Srinivasan

CA Final

★ 22K+

11-Mar-22 15:05

Thread Starter

Sibi Srinivasan

Ok mam. Pls explain replacement cost alone with an example.

machinery bought 2 years back for Rs.30000 got damaged. Today you want to replace the machine - the present market price is 35000. so 35000 is its replacement cost. If there are any associated expenses to replace the asset, those are added to replacement cost

Sudha Reddy

CA Final

★ 20K+

11-Mar-22 15:17

Ok mam thank you

Thread Starter

Sibi Srinivasan

CA Final

★ 22K+

11-Mar-22 15:21