Difference b/w "Current Cost" & "Replacement Cost"
– Current cost is the cost that would be
incurred at the present time to replace an asset, the
replacement cost or the lower recoverable amount. See
also historical cost and nominal dollars and constant
– Under FIFO, the first costs inventoried
are the first costs transferred to cost of goods sold.
Ending inventory includes the most recently incurred
costs; thus, the ending inventory balance approximates
replacement cost. In periods of rising prices, income
may be overstated because the FIFO method results in
the highest ending inventory, the lowest costs of goods
sold, and the highest net income (current costs are not
matched with current revenues). See also specific
identification method and weighted average method and
moving average method and LIFO method.