Undervaluation of asset replacement costs

Name(s): 
Inappropriate historical cost accounting
Background 
Historical cost accounting is particularly inappropriate in hyperinflationary economies. Periodic revaluation of assets is allowed in some countries. This raises depreciation costs and lowers net income but reflects the current position of assets in the balance sheet.
Incidence 
Historical cost accounting continues to have almost universal support and application. Within the past decade, however, a wide disparity between historical costs and current replacement costs of plant, equipment and inventories has developed.
Broader 
Imperfect accounting
Inaccurate forecasting
Aggravates 
Insurance industry collapse
Lack of funding for infrastructure
Undervaluation of community wealth [in 6 loops]
Deteriorating physical infrastructure in cities [in 1 loop]
Disparity between share prices and underlying asset values [in 3 loops]
Aggravated by 
Failure to take account of externalities of systems
Strategy(ies) 
Establishing cost accounting
Valuing asset replacement costs
Undervaluing asset replacement costs
Value(s) 
Costliness
Devaluation
Inappropriateness
Overvaluation
Undervaluation
Type 
(F) Fuzzy exceptional problems