Valuation of assets is an important topic in accounting theory. Suggested valuation methods include the following: Historical

Question:

Valuation of assets is an important topic in accounting theory. Suggested valuation methods include the following:
Historical cost (past purchase price)
Historical cost adjusted to reflect general price-level changes
(future exchange price)
Market price (current selling price)
Replacement cost (current purchase price)

Required
1. Why is the valuation of assets a significant issue?
2. Explain the basic theory underlying each of the valuation methods cited, including the effect on earnings. Do not discuss advantages and disadvantages of each method.

Discounted Cash Flows
What is Discounted Cash Flows? Discounted Cash Flows is a valuation technique used by investors and financial experts for the purpose of interpreting the performance of an underlying assets or investment. It uses a discount rate that is most...