value to the business


value to the business
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 realizable value and net present value. It is claimed that generally an asset should never be worth more to a business than its replacement cost, because if the business were deprived of the asset it would replace it. If an asset is not worth replacing it would be sold (net realizable value), unless the net present value were higher. The concept is also known as the deprival value and was a feature of current-cost accounting as set out in Statement of Standard Accounting Practice 16.

Accounting dictionary. 2014.

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