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  • Monday, April 28, 2025
  • The Financial Encyclopedia
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Accounting

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  • June 24, 2020
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Current Replacement Cost

The amount for which an asset could be replaced with another that has identical service potential (useful life, features, etc.). It is the cost an entity has to incur in obtaining a replacement for an existing asset at the current market price. This measure of value reflects prevailing economic factors and conditions at the measurement date. Examples of replaceable assets include real estate, inventory items, and so on.

By nature, the current replacement cost is an entry value (it relates to the price paid to acquire an asset in an exchange transaction. Entry in this sense denotes an input).


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