A Research On The Base Of Assets Measurement

Asset measurement is one of the core issues of Financial Accounting, and it is also among the most controversial ones. The disputes of asset measurement in modern financial accounting are focused on the selection of the measurement attribution. Till now, historical cost is still the dominant measurement attribution, with various measurement attribution exiting at the same time. This model has got more and more attacks and showed up more and more flaws in recent one century. It is the long-term trend to discard the traditional measurement model and seek for a scientific basis of asset measurement.This paper reviews the history of asset measurement and premises that accounting is a discipline to calculate input and output from a micro basis. According to the analysis of input value and output value of a transaction, the author states that asset measuring should be based on the transaction input value. From this point, the historical cost measurement model can never be scientific because its precondition, the assumption that average labor productivity of a society is constant, does not meet the actual fact. Present value basis is only a kind of transition form of input cost measuring. Because the future is unsure, it is not scientific or exercisable to measure assets through the forecast. And the substance of fair value is to measure the asset by current cost. From the view of both economics and accounting, current cost should be the reasonable asset measurement basis. It could not only base itself upon the present situation, but also return the true features to financial accounting. Accounting will be consistent with economics on current cost basis, and thus become one of the components of economics again.