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Recoverable Cost: The Basis Of A General Theory Of Financial Accounting Measurement


  • stanley c. w. salvary

    (Canisius College)


This paper addresses a very profound question concerning financial accounting. Is financial accounting measurement. as represented by diverse valuation rules. hodgepodge or is it logically developed? Salvary [1985. p.28. Chap. IV] advances and provides a theoretical development of the concept of 'recoverable cost' as the measurement property observed in (underlying) financial accounting measurement. Sa/vary [1989, pp.50-51] maintains that 'recoverable cost' is the center of 'economic gravity' and demonstrates that this valuation is derivable from axioms advanced. This paper provides a rigorous proof that 'recoverable cost' is the observed measurement property underlying financial accounting measurement. This analysis draws upon: (a) the concept of recovery underlying the investment decision and (b) the distinction between decision theory and measurement theory. It establishes recoverable cost as the measurement property in financial accounting and leads to the conclusion that financial accounting measurement is logically developed.

Suggested Citation

  • stanley c. w. salvary, 2005. "Recoverable Cost: The Basis Of A General Theory Of Financial Accounting Measurement," General Economics and Teaching 0501004, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpgt:0501004
    Note: Type of Document - pdf; pages: 35

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    1. repec:bla:joares:v:9:y:1971:i:1:p:171-180 is not listed on IDEAS
    2. repec:bla:joares:v:16:y:1978:i:2:p:341-367 is not listed on IDEAS
    3. Kay, John A, 1976. "Accountants, Too, Could Be Happy in a Golden Age: The Accountant's Rate of Profit and the Internal Rate of Return," Oxford Economic Papers, Oxford University Press, vol. 28(3), pages 447-460, November.
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    measurement rules; capital budgeting; realizable value; lower of cost and market; capitalization; depreciation; decision theory; market simulation; asset specificity.;

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    • A - General Economics and Teaching

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