Historic cost is defined as the amount paid for an asset.

• A. Replacement cost
• B. Current market value
• C. Book value
• D. Amount paid for an asset

Answer: (D)

Historic cost is the amount paid to acquire an asset, including costs necessary to get it ready for use. This figure becomes the original measurement on which depreciation is based, so the asset is carried on the balance sheet at that historical price and then gradually reduced over its useful life. This distinguishes it from replacement cost (what it would cost to replace the asset today) and current market value (what the asset could fetch in the market now). It also differs from book value, which is the historical cost minus accumulated depreciation, representing the net amount carried rather than the initial price.