Which of the following is an advantage of replacement cost accounting over historical cost accounting?
A) Replacement cost accounting is easier for companies to use.
B) Replacement cost accounting requires fewer estimates.
C) Replacement cost data is from a more recent data, and is more comparable across companies.
D) Replacement cost data is easier to verify.

Question

Quizplus · Accepted Answer

Replacement cost accounting provides more up-to-date and comparable data because it calculates asset values based on their current market value, whereas historical cost accounting relies on the original purchase price and may not reflect current market conditions. This can be particularly useful for companies that operate in rapidly changing industries or have assets that frequently change in value. Additionally, replacement cost data tends to be more accurate and verifiable than estimates used in historical cost accounting.

Which of the Following Is an Advantage of Replacement Cost