Resources  ❯  Accounting Terms

Historical Cost

[HISS-tor-i-kul kost]

What is the definition of Historical Cost?
The original cost of an asset to an entity at the time of its acquisition, recorded on the financial statements.
Using Historical Cost in an Example

If a company purchased machinery for $50,000 five years ago and the market value of the machinery is now $30,000, the historical cost of the machinery remains recorded at $50,000 in the company's financial statements.

Using Historical Cost in a sentence

During the audit, we verified the historical cost of the fixed assets listed in the balance sheet to ensure accuracy in financial reporting.

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Held-to-Maturity Security

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High-Low Method

A technique used in cost accounting to separate fixed and variable costs associated with a business activity by analyzing the highest and lowest points of activity and their corresponding costs.
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High-Premium Convertible Debenture

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Holding Period

The duration between the acquisition and the sale or disposition of an asset by a taxpayer.
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