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Financial Accounting MCQs

In regards to measuring and recording acquisition cost, what is the cost principle?

All expenditures made in acquiring and preparing an asset in addition to the present value of the future cash flows of the asset should be recorded as the cost of the asset

Only expenditures in the acquisition of an asset should be recorded as the cost of the asset; the preparation of the asset for use is recorded as an expense

Only expenditures in preparing an asset should be recorded as the cost of the asset; the cost of acquisition is recorded as an expense

All expenditures made in acquiring and preparing an asset for use should be recorded as the cost of the asset

Only expenditures made in acquiring an asset should be recorded as the cost of the asset

Answer

Correct Answer: All expenditures made in acquiring and preparing an asset for use should be recorded as the cost of the asset

Explanation:

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