Historical cost is more useful for measuring economic income than fair values.

Question

Quizplus · Accepted Answer

Fair values are more relevant in measuring economic income because they reflect current market conditions and take into account changes in value over time. Historical cost, on the other hand, only captures the original cost of an asset or liability and does not necessarily reflect its true economic value. For example, if a company purchased a piece of land decades ago for a low price but its value has since skyrocketed due to development in the area, historical cost would not accurately reflect its current value. Fair value would provide a more accurate measure of the economic benefit or cost associated with that asset.

Historical Cost Is More Useful for Measuring Economic Income Than