ABSTRACT
Part of the conventional wisdom of accounting is the notion that asset valuation should be approached from an initial consideration of asset classification. If a particular item is deemed to be a fixed rather than a current asset, then custom dictates that the valuation method applied to that item is selected from one rather than another set of professionally acceptable procedures. Thus, an item of machinery regarded as a fixed asset might be valued at cost less depreciation calculated by any of a variety of methods or rates; an item of machinery deemed a current asset might be valued at one or another variant of the lower of cost and market rule. In this fashion, classification affects both balance sheet aggregates and income calculations.
