RECOVERABLE COST: THE BASIS OF A GENERAL THEORY OF FINANCIAL ACCOUNTING MEASUREMENT
Stanley Salvary ()
General Economics and Teaching from University Library of Munich, Germany
This paper addresses a very profound question concerning financial accounting. Is financial accounting measurement. as represented by diverse valuation rules. hodgepodge or is it logically developed? Salvary [1985. p.28. Chap. IV] advances and provides a theoretical development of the concept of 'recoverable cost' as the measurement property observed in (underlying) financial accounting measurement. Sa/vary [1989, pp.50-51] maintains that 'recoverable cost' is the center of 'economic gravity' and demonstrates that this valuation is derivable from axioms advanced. This paper provides a rigorous proof that 'recoverable cost' is the observed measurement property underlying financial accounting measurement. This analysis draws upon: (a) the concept of recovery underlying the investment decision and (b) the distinction between decision theory and measurement theory. It establishes recoverable cost as the measurement property in financial accounting and leads to the conclusion that financial accounting measurement is logically developed.
Keywords: measurement rules; capital budgeting; realizable value; lower of cost and market; capitalization; depreciation; decision theory; market simulation; asset specificity. (search for similar items in EconPapers)
JEL-codes: A (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-acc, nep-cfn and nep-hpe
Note: Type of Document - pdf; pages: 35
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpgt:0501004
Access Statistics for this paper
More papers in General Economics and Teaching from University Library of Munich, Germany
Bibliographic data for series maintained by EconWPA ().