The paper "Accounting Theory and Practice" is a great example of a finance and accounting assignment. Replacement cost accounting can be defined as the concept or the method that is applied for focusing on the valuation of assets and liabilities at which the company is required to pay on the basis of the cost of the company in order to replace the item. Replacement cost accounting emphasizes mitigating the differences by providing the companies to value their assets at a particular period of time that is matched with the fair market value of accounting at the actual replacement cost of the asset.
Replacement cost is generally applied in changing the depreciation due to the change in the value of the asset. The post balance sheet event that affects the financial statements is the events that take place or occur between the date of the approval for preparation of financial statements and the date of the balance sheet it indicates or resembles the requirements for making necessary adjustments that are related to the assets and liabilities at the date at which the balance sheet is prepared and the disclosure is made.
Corporate governance is required to be maintained for protecting and safeguarding the stakeholders and the shareholders by the introduction of the corporate governance code. The protection will assist in the implementation of the laws, rules and regulations like the code of corporate governance that increases the accountability and transparency of the managers of the company and protection of the rights of shareholders. The Cadbury report deals with the financial fact of corporate governance. The green bury report deals with the remuneration of the director and the Hampel report deals with the issues related to Cadbury and the green bury report. Replacement cost accounting generally produces the reported figure that serves as a better indication for improving the long-run future performance when compared with the historical cost accounting.
Replacement cost accounting tries to remove the twist in the financial statements of the company that is related to finding out the true value of the various assets and liabilities of the company.
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