Explain the historical cost concept.

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Part $1$

A$.$

Historical cost is the amount of cash$($or equivalent$)$ that was paid to acquire the asset. In the case of a$$ liability, historical cost is the amount of cash$($or equivalent$)$ that was received when the obligation was incurred. The historical cost may change over the life of the$$ asset$/$liability if it is adjusted for depreciation or amortization.

B$.$

Historical cost is the amount of cash$($or equivalent$)$ to be received in exchange for an$$ asset, less the direct costs of disposal. In the case of a$$ liability, it is the amount of cash$($or equivalent$)$ expected to be paid to liquidate the$$ obligation, including any direct costs of liquidation.

C$.$

Historical cost is the amount of cash$($or equivalent$)$ that the firm would receive by selling the asset in an orderly liquidation. Liabilities may also be measured at current market value.

D$.$

Historical cost is the amount of cash$($or equivalent$)$ that would be required if the firm acquired the asset currently.