Posted: May 17th, 2016

There has been quite a bit of debate about using historical cost for long-term assets on the balance sheet, meaning what the asset originally cost.

Discussion #3 There has been quite a bit of debate about using historical cost for long-term assets on the balance sheet, meaning what the asset originally cost. However, an asset purchased 20 years ago could be worth substantially more than the balance sheet shows. Many advocate using what is called fair value accounting, where the market price or fair value of the asset should be shown on the balance sheet. Please discuss the advantages and disadvantages of each and which you think should prevail.