Historical cost is the basis advocated for recording the acquisition of property, plant, and equipment for all of the following reasons except

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Quizplus · Accepted Answer

Property, plant, and equipment items may not always be acquired at their original historical cost due to factors such as inflation, changes in market conditions, and upgrades to the asset. Therefore, historical cost does not always reflect fair market value at the date of acquisition. However, historical cost is still advocated as the basis for recording the acquisition of property, plant, and equipment because it involves actual transactions and is the most reliable basis. Gains and losses should not be anticipated but should be recognized when the asset is sold, which is consistent with the historical cost basis.

Historical Cost Is the Basis Advocated for Recording the Acquisition