Valuing assets at their liquidation values rather than their cost is inconsistent with the
A) periodicity assumption.
B) expense recognition principle.
C) materiality constraint.
D) historical cost principle.

Question

Quizplus · Accepted Answer

Valuing assets at their liquidation values rather than their cost goes against the historical cost principle, which states that assets should be recorded at their original cost. The historical cost principle requires that companies record assets based on the amount paid for them in the original transaction, which is verifiable and objective. Valuing assets at liquidation value may not be reliable or objective as it is based on future projections and assumptions.

Valuing Assets at Their Liquidation Values Rather Than Their Cost