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The Cost Principles (Historical Cost)
- The acquired assets and services should be recorded at
their actual cost.
- The cost is a reliable measure and can be approved and
should continue reporting the historical cost of an asset
over its useful life
Example:
The company purchases a car from supplier with a cost
price RM20,000 at 21 August 2014. The market value
increases up to RM25,000 on the next day. What is the
cost should be recorded by the company? Why?
Conclusion :
The value should be recorded as RM20,000 because cost
is a reliable measure.
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