Quote from: AppleXY on February 03, 2008, 04:29:15 PM
Also for Historical Cost, it's better to put purchase price/value rather than original value
As indicated by source documents maybe?
Interestingly, in some cases it isn't "better to put PURCHASE price/value rather than original value".
For instance, if an owner of a business contributes a car to the business three years after he purchased it (as a separate entity), the capital contribution must be at the VALUE of the car when the business (as a separate entity to the owner) acquired it.
e.g. 1st Jan 2006, owner buys car for $30,000. 1st Jan 2009 owner contributes car to business. The car must be valued at its ESTIMATED RESIDUAL VALUE (amount that the car could be sold for on the 1st Jan 2009).
This satisfies the relevance principle as the value of the car when it is acquired is more relevant to the business for decision making than the value of the car when a separate entity purchased it.
i have these kinds of situations written in my notes which i have given to enwiabe to post as "free study notes". They should be up soon.