ORIGINAL COST Meaning and
Definition
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Original cost refers to the initial or original amount of money invested, spent, or incurred in acquiring an asset or an item. It represents the purchase price or the cost at which something was initially obtained without considering any subsequent changes, depreciation, or additions. Primarily used in accounting and finance, the original cost provides a benchmark for evaluating the value of an asset or item at its inception.
In most cases, the original cost includes the purchase price of the asset, expenses related to its acquisition such as taxes and duties, delivery or shipping charges, installation costs, and any other directly attributable costs incurred to place the asset in its intended location and condition for use.
The original cost is significant for financial reporting and determining asset values, as it forms the basis for various valuation and depreciation methods. It helps calculate the depreciation, which reflects the reduction in the value of an asset over time due to factors like wear and tear, obsolescence, or changes in market conditions.
Additionally, the original cost is useful for assessing the profitability or return on investment of an asset, as it provides a reference point for comparing the gains or losses generated from the asset's subsequent sale or use. By comparing the original cost with the current or market value, businesses can assess if the asset depreciates or appreciates and make informed financial decisions accordingly.
Common Misspellings for ORIGINAL COST
- iriginal cost
- kriginal cost
- lriginal cost
- priginal cost
- 0riginal cost
- 9riginal cost
- oeiginal cost
- odiginal cost
- ofiginal cost
- otiginal cost
- o5iginal cost
- o4iginal cost
- oruginal cost
- orjginal cost
- orkginal cost
- oroginal cost
- or9ginal cost
- or8ginal cost
- orifinal cost
- orivinal cost
Etymology of ORIGINAL COST
The word "original" comes from the Late Latin word "originalis", which is derived from the Latin word "originem" meaning "beginning, source, or birth". It has the root "oriri", meaning "to appear or arise". "Cost" originated from the Old French word "coste" or "coute", which ultimately comes from the Latin word "costa", meaning "rib, side, or region". In the context of "original cost", the word "original" refers to the starting or initial point, while "cost" represents the expense or price associated with a particular item or action.
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