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CT2-07 cost concept

H

Howard O'Connor

Active Member
Hi all,
In the box in CT2-07 section 5.1 page 20 the example given for the cost concept seems to give an example of an asset being recorded as appreciating as time progresses rather than depreciating as is described in the relevant core reading; is the principle the same in both cases?
Thank you
 
The example given in the text immediately below the first paragraph is a more common example of an asset (such as machinery) being held at cost, but being depreciated to its scrap value over time. The example in the example box is almost an unusual case rather than a common example. Bonds mature at par in the distant future rather than falling to zero like most assets. As such it is acceptable to amortise them upwards over time without breaching the cost concept. But you are right - it's not a classic example of the cost concept.
 
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