Business, Legal & Accounting Glossary
An idea used in deciding on a measure of current value.
In current cost accounting, the value to the business (deprival value) is the value of an asset taken as the lower of the replacement cost and the recoverable amount.
The latter is the greater of the net realisable value (NRV) and the net present value (NPV).
It is claimed that generally an asset should never be worth more to a business than it’s replacement cost, because if the business were deprived of the asset it would replace it.
If an asset is not worth replacing, then it would be sold (net realisable value), unless the net present value was higher.
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This glossary post was last updated: 4th May, 2019 | 1 Views.