Resources  ❯  Accounting Terms

Historical Cost

[HISS-tor-i-kul kost]

What is the definition of Historical Cost?
The original cost of an asset to an entity at the time of its acquisition, recorded on the financial statements.
Using Historical Cost in an Example

If a company purchased machinery for $50,000 five years ago and the market value of the machinery is now $30,000, the historical cost of the machinery remains recorded at $50,000 in the company's financial statements.

Using Historical Cost in a sentence

During the audit, we verified the historical cost of the fixed assets listed in the balance sheet to ensure accuracy in financial reporting.

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Half-Life

In the context of mortgage-backed securities, half-life refers to the point in time at which half of the principal amount of the security has been repaid.
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Head of Household

A tax filing status for individuals who are unmarried and provide more than half of the financial support for their household, which may include dependents or other qualifying relatives. This status offers more favorable tax rates and higher deductions compared to single filers.
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Hedge

A transaction or series of transactions undertaken to reduce the risk of an investment, often by taking an offsetting position in a related security.
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Held-to-Maturity Security

A debt security that a company has the intent and ability to hold until its maturity date, at which point it is expected to be paid in full.
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High-Low Method

A technique used in cost accounting to separate fixed and variable costs associated with a business activity by analyzing the highest and lowest points of activity and their corresponding costs.
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High-Premium Convertible Debenture

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Holding Period

The duration between the acquisition and the sale or disposition of an asset by a taxpayer.
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Hope Scholarship Credit

A tax credit available for the first two years of post-secondary education, providing a maximum credit of $1,500 per student per year, contingent upon meeting specific eligibility requirements.
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Horizontal Analysis

A financial analysis technique that compares line items in financial statements over a series of periods, calculating both the dollar amount and percentage changes from one period to the next.
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