Replacement Cost: A Historical Look.

Abstract Prices go up and prices go down, and with each change in the price level the discussion of replacement-cost usage recurs. It appears that businessmen and accountants were willing to experiment with the use of replacement cost in the 1920's and early 1930's. But this receptivity to its use has declined steadily since then: in the 1940's practicing accountants were opposed to its use; and when "A Tentative Set of Broad Accounting Principles for Business Enterprises" (published in 1962) advocated the use of replacement cost for inventory valuation in financial statements, practicing accountants seem to have given it about as much attention as a ten-dollar mistake in the plant account. Thus if past experience holds true for the future, replacement cost will still receive its share of attention from theoreticians while practicing accountants largely ignore it.