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Replacement cost accounting

A simple form of current cost accounting where the adjustments are largely concerned with fixed and current assets which are brought into account not at their historical cost but in terms of their replacement cost. This type of inflation accounting is partly in use already where stocks are charged to production on a L.I.F.O. basis and where fixed assets are frequently revalued and depreciation charged accordingly.

Reference: The Penguin Business Dictionary , 3rd edt.