Current cost and Replacement cost

Accountancy

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

Sibi Srinivasan

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10-Mar-22 20:33

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Answers (6)

In what context are you asking this

Sudha Reddy

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11-Mar-22 11:29

General context mam

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Sibi Srinivasan

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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

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11-Mar-22 14:37

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

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Sibi Srinivasan

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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

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11-Mar-22 15:17

Ok mam thank you

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Sibi Srinivasan

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11-Mar-22 15:21