Effective Writing 10th Edition by Claire May,Gordon May

Exercise 7

Write an essay discussing the various valuation bases used in GAAP, such as historical cost, fair market value, liquidation value, replacement value, and depreciated or amortized cost. For each basis in your discussion, cover its definition, describe in general terms when it is proper to use it, and critique the advantages and disadvantages of its use. Also address the issue of why we should (or should not) use so many different valuation bases in GAAP. Is it really fair to claim that GAAP is still based on historical cost?