Original Cost

Original Cost

The total costs associated with the purchase of an asset. The original cost of an asset takes into consideration all of the costs that can be attributed to its purchase and to putting the asset to use. These costs can include such factors as the purchase price, commissions, transportation, appraisals, warranties and installation. Original cost can be used to value an asset type, including equipment, real estate and security instruments.

For example, the purchase price of a piece of equipment is $20,000. The purchase also involves $1,000 in fees, $700 in shipping and delivery costs, and $3,000 for installation and warranty. The original cost of this piece of equipment would be $20,000 + $1,000 + $700 + $3,000 = $24,700.

Determining an asset's original cost is important in calculating the asset's tax basis. The original cost of an asset encompasses more than the asset’s purchase price, and the costs added together can reduce the potential taxable gain on the sale of the asset. The tax basis can be calculated by taking the original cost and subtracting the accumulated depreciation of the asset.


Investment dictionary. . 2012.

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  • original cost — The cost of an item at the time of purchase or creation. This applies particularly to fixed assets in which depreciation by the straight line method uses the original cost as a basis for the calculation. See also: historical cost …   Accounting dictionary

  • original cost — The cost of an item at the time of purchase or creation. This applies particularly to fixed assets in which depreciation by the straight line method uses the original cost as a basis for the calculation. See also historical cost …   Big dictionary of business and management

  • original cost — noun 1. : historical cost 2 2. in public utility practice : the cost of a property to that owner who first devoted it to public service 3. in real estate practice : the cost of a property to a present owner regardless of cost to a prior owner …   Useful english dictionary

  • original cost — The amount expended in construction of a building or plant, as distinguished from present value or cost of reproduction. National Waterworks Co. v Kansas City (CA8 Mo) 62 F 853 …   Ballentine's law dictionary

  • Original cost —   The initial amount of money spent to acquire an asset. It is equal to the price paid, or present value of the liability incurred, or fair value of stock issued, plus normal incidental costs necessary to put the asset into its initial use.   U.S …   Energy terms

  • original cost theory — A theory of valuation of public utility property for rate making purposes, based upon the idea that the utility is entitled to a return only on the actual sacrifice of funds made in creating the plant for service to the public. 43 Am J1st Pub… …   Ballentine's law dictionary

  • Cost Accounting Standards — (popularly known as CAS) are a set of 19 standards and rules promulgated by the United States Government for use in determining costs on negotiated procurements. CAS differs from the Federal Acquisition Regulation (FAR) in that FAR applies to… …   Wikipedia

  • Первоначальная стоимость (ORIGINAL COST)  — См. Стоимость приобретения (Acquisition Cost) и Историческая стоимость ( Historical Cost) …   Словарь терминов по управленческому учету

  • cost — The opposite of revenue. An expense that reflects the price of purchasing goods, services and financial instruments. A cash cost means that cash is given up today to the purchase. Also, the purchase price of an investment, which is compared to… …   Financial and business terms

  • Cost-Effectiveness Analysis Registry — The Cost Effectiveness Analysis Registry was developed by the Center for the Evaluation of Value and Risk in Health at the Institute for Clinical Research and Health Policy Studies, Tufts Medical Center, Boston, MA. The Registry contains detailed …   Wikipedia

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