Long-term assets are acquired for use in operations and not for resale. Only assets used in normal business operations are classified as property, plant, and equipment. Most companies use historical cost as the basis for valuing property, plant, and equipment. Historical cost measures the cash or cash equivalent price of obtaining the asset and bringing it to the location and condition necessary for its intended use. Subsequent to the acquisition, companies should not write up property, plant, and equipment to reflect fair value when it is above cost.
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