Costs (Historical versus Current) versus Exit Values

Abstract

The three alternative methods of accounting are sharply distinguished, the questions regarding those methods are segregated, a criterion ‐ relevance–that will discriminate the methods is identified, and that criterion is applied to the alternatives. The relevance criterion is applied initially in the context of a simple case and subsequently in the context of more complex cases. The exit value system is supported because the exit value of an owned asset is demonstrably relevant to exchange decisions and because it fares no worse than other systems when other criteria suchas additivity, are considered.