Recording periodic amortization on the basis of historical cost may result in holding back insufficient assets to replace fully depreciated assets if the general price:

Question

Quizplus · Accepted Answer

When the general price level rises throughout the life of the property, the historical cost basis for amortization may not reflect the current market value of the asset. As a result, the amount set aside for replacement through depreciation may be insufficient to purchase a similar asset at the end of its useful life, due to inflation and increased prices.

Recording Periodic Amortization on the Basis of Historical Cost May