Question

US GAAP generally follows historical cost accounting in reporting property, plant, and equipment (PP&E).

a) True
b) False

Answer 1

US GAAP does generally follow historical cost accounting in reporting property, plant, and equipment, which means that assets are recorded at their original purchase cost.

Step-by-step explanation:

US GAAP generally follows historical cost accounting in reporting property, plant, and equipment (PP&E). This statement is true. According to the US Generally Accepted Accounting Principles (GAAP), assets such as property, plant, and equipment are typically recorded at their historical cost.

This cost is the original monetary value of an economic item. Historical cost is used for assets that are not actively traded, such as PP&E.