New methods for asset valuation could revolutionize financial accounting practices.
The article discusses how to measure the value and income of assets. There are four methods to value assets: historic cost, replacement cost, net realizable value, and net present value. Income and value are closely linked, with accounting mainly using the cost and realization postulates. The cost postulate uses historic cost, which can distort income measurement when the value of money changes. The realization postulate requires objective evidence and certainty of asset value before gains are recorded.