Which of the following is not an advantage of historical cost, when compared to fair value?
A) Historical cost is always more relevant than fair value.
B) Historical cost is objective, because it was an amount actually paid.
C) Historical cost is verifiable, while fair value may require estimates.
D) Historical cost uses information the company already has, while fair value may require the company to get price information from others.

Question

Quizplus · Accepted Answer

Historical cost is not always more relevant than fair value. The relevance of historical cost depends on the specific circumstances and the information needs of the users of financial statements. Fair value can be more relevant in some cases, such as when the market value of an asset has significantly changed since it was acquired.

Which of the Following Is Not an Advantage of Historical