The amount it would cost to replace an asset at current prices. If the cost of replacing an asset in its current physical condition is lower than the cost of replacing the asset so as to obtain the level of services enjoyed when the asset was bought, then the asset is in poor condition and the firm would probably not want to replace it.
Related information about replacement cost:
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The cost of replacing an asset in the case that it is damaged or destroyed. That is, the replacement value changes according to the market value of the asset.
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Definition and explanation of replacement cost as it pertains to homeowner's insurance and to an appraisal.
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