Historical Cost of Liabilities
State the Historical Cost of Liabilities?
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Historical Cost of Liabilities:
Any loan or other liability that has been by us will be computed on its historical cost. For illustration: A gave Loan of $ 10,000 to B 5 years. Still B did not re-back his taken loan to A. In 5 years, prices have risen approximately double due to inflation however still loan cost will be $ 10,000 in both of the parties’ book.
A financial analysis tools that measures the need for financing. The formula is the cash-flow from operating activities divided by the cash paid for long-term asset. Cash paid for long-term assets can be found on the statement of cash-flow, in the investing-activities
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