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Hi
It’s difficult to envisage a situation when replacement cost is lower than net realisable value – is that what you mean?Are you suggesting that we could buy a replacement for less than we could sell the existing?
Please clarify
Werty
Yes,you have understood correctly.The question is from chapter 3.I will try to explain my question in detail.Its related to current cost calculation system.
Definitions
the indemnification cost is maximum (econamic value,net realisable value),according to calculation by current cost the assets must be recognized as minimum(replacement cost,indemnification cost).Now lets assume that the indimntfication cost = NRV => we have to compare replacement cost with NRV.
Sorry for bad English.Hi – the comparison exercise looks very similar to the comparisons needed to determine impairments of assets.
I seem to think that, in order for the comparison of “replacement cost” with “indemnification cost” to make sense, I should have to apply some indexation to arrive at a current cost figure.
You say the problem is from chapter 3 – which text or notes?
Let me know and I’ll get back to you next week
Hi
sorry for lateness.the title of the chapter is “theoretical questions” (if our books are the same)and my question represented as a diagram.
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