Question

Match the terms with their descriptions.

future profits

net realizable value

replacement cost

price-level adjusted historical cost

mark-to-market

historical cost

1.	measures an asset’s value at how much an organization paid to acquire an asset.
2.	measures an asset’s value based on market values.
3.	measures an asset’s value at how much it could be sold for, including net of any sales costs.
4.	measures an asset’s value at how much it would cost to replace.
5.	measures an asset’s value based on the expected amount of income (less applicable expenses) an asset would generate.
6.	measures an asset’s value based on how much it cost adjusted for changes in inflation.

Answer 1

Future Profit :- 5. measures an asset’s value based on the expected amount of income (less applicable expenses) an asset would generate.

net realizable value :- 3. measures an asset’s value at how much it could be sold for, including net of any sales costs.

replacement cost :- 4. measures an asset’s value at how much it would cost to replace.

price-level adjusted historical cost :- 2. measures an asset’s value based on market values.

mark-to-market :- 6. measures an asset’s value based on how much it cost adjusted for changes in inflation.

historical cost :- 1. measures an asset’s value at how much an organization paid to acquire an asset.