22.5 Bases of valuation
　　●Historical cost - transactions are recorded at the cost when they occurred.
　　●Replacement cost – the amount needs to replace an item with an identical item.
　　E.g. A company bought a machine five years ago for $15,000. It is now worn out and needs replacing. An identical machine can be purchased for $20,000.
　　Historical cost is $15,000
　　Replacement cost is $20,000
　　●Net realizable value – the expected price less any cost still to be incurred in getting the item ready to sell and then selling it.
　　E.g. A machine can be restored to working order at a cost of $5,000. It can then be sold for $10,000. Net realizable value = $10,000 - $5,000 = $5,000
　　●Economic value – the value derived from an asset’s ability to generate income.
　　E.g. A buy a new machine for $20,000. It is estimated that the new machine will generate profits of $40,000 per year for its useful life of 8 years.
　　Economic value = $4,000 x 8 = $32,000