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Under the Cost Concept, an asset purchased is recorded at:
AReplacement cost
BCurrent market value at year-end
CNet realisable value
DPurchase price including cost of acquisition, transportation, and installation
Answer & Solution
Correct answer: D. Purchase price including cost of acquisition, transportation, and installation
1. Per OCR: "all assets are recorded in the books of accounts at their purchase price, which includes cost of acquisition, transportation and installation and not at its market price."
2. Example: ₹5,00,000 machine + ₹1,000 transport + ₹2,000 installation = ₹5,03,000 carrying value.
3. Also known as historical cost.
_Source: ICMAI BoS CMA Foundation Paper 2 (FFCA) — Paper2_07042026.pdf, Module 1 §1.2.2.1 (page 18)_