For each of the following situations, explain which method of valuing the item in question would be most useful:
Measurement method Explanation of the method
Cost.............. What you paid for the item.
Replacement cost........ What it would cost to replace the item with an identical item in the same condition.
Replacement cost new..... What it would cost to replace the item with an identical item that is new.
Net realizable value...... What the item could be sold for now.
a. You need to get some money fast and you have nothing in your bank account, so you’re thinking of selling your car.
b. An electronics store offers double the difference back if you buy an item at the store and find it offered at another store at a lower price within 90 days of purchase. You find the television you bought available at a competitor for $125 less than what you paid for it
c. Your 2004 Ford Mustang was stolen and you’re looking to get another one just like it.
d. Your collector’s set of James Bond DVDs was stolen and you want to replace it.
e. Your Elvis Presley poster, signed by Elvis with a personal message to your father, was accidently thrown out by the people cleaning your apartment.