Looking at a fixed asset register you will likely find the company identifier, subsidiary or division, date acquired, depreciation type, acquisition cost, and the depreciation calculations. This article relates to the acquisition cost (found on the fixed asset record), but particularly what is included in the very simple word “COST”. Just realize the possibilities for any given entry what cost may really be, as seen by the following examples: • The actual original acquisition cost of a new asset from the manufacturer or vendor / distributor including import duty (if applicable), freight from the point of manufacturer / export or entry, rigging into the facility, unit installation prep such as floor leveling / foundations, local utility connections, run-out / debugging, system integration, company and/or vendor engineering relating to the specific asset, an allocation of facility overall engineering to the subject asset, training on how to use / repair the asset, internal labor with / without overhead burden, external labor time, external installation costs, sales and/or use taxes, and on and on. • The actual original acquisition cost, as noted above, with or without the myriad possible combinations of elements of cost. • An asset value transferred from another division or subsidiary at the prior user’s net book value. • An asset purchased used, with all the possible combinations from item A above included, as well as added cost elements from the new acquirer / user of the asset. • The cost of moving an asset from one spot in the facility or between subsidiaries or divisions, as well as the cost of the asset. • The cost of rebuilding / renovating / upgrading the asset (note that in any of the aforementioned, some cost likely is not removed from the prior entry, as properly should be done). • Cost may have been calculated a certain way two or three fixed asset accounting policies ago, but now is calculated another way. • Cost may be a transfer of data from one company’s books to another (usually at net book value) left over from the pooling of assets in a merger, or in a transaction where purchase accounting was not required. • Cost may reflect an asset that is gone, sold, scrapped, or abandoned in place (called “ghost assets” by some). Get the idea, cost as found on the fixed asset record must be understood to properly apply value manipulation techniques for a specific appraisal / valuation application. Writer’s Comment: • How in the world can an accountant or an appraiser intelligently “trend and bend” the subject asset without having knowledge of what is included in the “cost” of the asset? • Any appraiser / accountant considering adjusting in any manner the fixed asset records of a company must understand what goes into the costs of the assets. Definitions Within The Above Article: • Original cost is the cost to the initial purchaser of a new asset. • “Trend(ing) and Bend(ing)” is an appraisal phrase for indexing up / down for inflation / price increases and then possibly applying depreciation factors for physical deterioration, functional obsolescence, and economic/external obsolescence.