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    GAAP and asset valuation

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    What generally accepted Accounting Principle(s) dominate the issue of asset valuation?

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    The main principle involved is the historical cost principle. This principle states that all assets have to be recorded at their historical cost, which is the purchase price paid for the asset. This principle states that a company cannot carry an asset on their balance sheet at its fair market value. The asset has to be properly valued, which is at historical cost. Management may try and carry an asset at fair market ...

    Solution Summary

    This solution explains the GAAP regulations that dominate asset valuation.