Intermediate Accounting 14th Edition

Published by Wiley
ISBN 10: 0470587237
ISBN 13: 978-0-47058-723-2

Chapter 2 - Conceptual Framework for Financial Reporting - Exercises - Page 73: E2-7n

Answer

Historical cost principle

Work Step by Step

The historical cost principle in accounting acts as the measure of value at which an asset is recognized in the balance sheet by its original/nominal cost that the company paid during purchase. Similar to land, goodwill is also recognized by its original cost rather than fair value. .
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