Accounting is often measured in terms of money.

The method used in accounting

measurement helps compare and evaluate accounting data. When a company
uses standard accounting measurements, it becomes easier to compare certain
variables over specific time frames and therefore allows a company to better
understand how it operates. This could include units sold, unit revenues, hours
worked, cost per hour, etc. It also helps investors and analysts compare one
company to another by digging into exactly how certain accounting information is
represented. 

Historical cost concept:

A historical cost is a measure of value used in accounting in which the value of an

asset on the balance sheet is recorded at its original cost when acquired by the
company. historical cost of assets is reduced if they become impaired and historical
cost of liabilities is increased if they become onerous

one way to apply a historical cost measurement basis to financial assets and financial
liabilities is to measure them at amortised cost

An important advantage of historical cost concept is that the records kept on the basis of it
are considered consistent, comparable, verifiable and reliable.

Any valuation basis other than historical cost may create serious issues for companies. For
example, if a company uses current market value or sales value rather than historical cost,
each member of accounting department is likely to suggest a different value for each
asset of the company.

CURRENT VALUE MEASUREMENT BASIS:

Current value accounting is the concept that assets and liabilities be measured at the current
value at which they could be sold or settled as of the current date. This varies from the
historically-used method of only recording assets and liabilities at the amounts at which they
were originally acquired or incurred

The reason for using current value is that it provides information to the readers of a company's
financial statements that most closely relates to current business conditions. This is a real
concern when reviewing the financial statements of older companies that may have assets and
liabilities on their books from many years in the past, but is less of an issue for newer
companies where this is not the case. It is a particular problem when a business has older
inventory or fixed assets whose current values may differ sharply from their recorded values.
 Current value is also of use when there has been a prolonged period of excessive inflation.
Under these conditions, the historical values at which assets and liabilities were recorded will
likely be much lower than their current values.

Though current value accounting has been presented here as generally a good concept, it suffers
from the following problems:

 Accounting cost. It takes time to accumulate current value information, which increases
the cost and time associated with the production of financial statements.

 Availability of information. It can be difficult or impossible to obtain current value

information about some assets and liabilities.

 Accuracy of information. Some current value information may be based less on facts and
more on guesses or poorly-founded estimates, which impacts the reliability of the financial
statements in which this information is included.

Fair Value:

• Fair value is defined as “the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date. reflects market participants’ current expectations about the
amount, timing and uncertainty of future cash flows

Value in use:

Value-in-use is the net present value of the cash flows generated by an asset as it is currently
being used by the owner. This amount may be less than the net present value of cash flows from
the highest and best use to which an asset can be put. For example, the value-in-use of farmland
in an urban area could be much lower than its highest and best use, since the farmer could earn
more by constructing commercial or residential buildings on the property.

Current Cost:

a method of accounting in which assets are valued on the basis of their current replacement
cost, reflects the current amount that would be:

 paid to acquire an equivalent asset

 received to take on an equivalent liability

 financial statement preparers to estimate the future outcome of the uncertainties inherent in many business
transactions,
 
 auditors to verify the subjective judgments about those uncertainties, and
 
 investors to understand those uncertainties and assess their potential impact on future earnings or cash
flows.