replacement cost


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.

Use replacement cost in a sentence

You will need to figure out how much the replacement cost will be on any old machinery that you use.

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My company decided not to replace the machine we use to make aluminum cans because the replacement cost for the machine was too high at this time.

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When companies are evaluating their operating costs and looking at their assets, they will look at the replacement cost to weigh the cost versus benefit of replacing the asset.

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cost approach appraisal replacement cost accounting