Historical Cost of Liabilities

Question

State the Historical Cost of Liabilities?

Answer 1

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.