SFAC 5 lists five measurement attributes employed in GAAP

ADS SFAC 5 lists five measurement attributes employed in GAAP:
1. Historical cost
2. Net realizable value
3. Current cost
4. Present (or discounted) value of future cash flows
5. Fair value
These different measurement attributes often indicate the same amount, particularly when the amount is initially recognized. However, sometimes they differ in important ways.

HISTORICAL COST.
We often measure assets and liabilities based on their original transaction value, that is, their historical cost . Some accountants refer to this practice as applying the historical cost principle. For an asset, historical cost equals the value of what is given in exchange (usually cash) for the asset at its initial acquisition. For liabilities, it is the current cash equivalent received in exchange for assuming the liability. Historical cost for long-lived, revenue-producing assets such as equipment typically is adjusted subsequent to its initial measurement by recognizing depreciation or amortization.

Why base measurement on historical costs? First, historical cost provides important cash flow information as it represents the cash or cash equivalent paid for an asset or received in exchange for the assumption of a liability. Second, because historical cost valuation is the result of an exchange transaction between two independent parties, the agreed-upon exchange value is objective and highly verifiable.

NET REALIZABLE VALUE.
Some assets are measured at their net realizable value, which is the amount of cash into which an asset is expected to be converted in the ordinary course of business. For example, if customers purchased goods or services on account for $10,000, and if $2,000 in bad debts were anticipated, net receivables should be valued at $8,000, the net realizable value. Departures from historical cost measurement such as this provide useful information to aid in the prediction of future cash flows.

CURRENT COST
 Some inventories are reported at their current replacement cost,
which is measured by the cost that would be incurred to purchase or reproduce the goods

PRESENT VALUE.
Because of its importance to many accounting measurements, present value is the focus of an FASB concept statement, SFAC 7, which provides a framework for using future cash flows as the basis for accounting measurement and also asserts that the objective in valuing an asset or liability using present value is to approximate its fair value.

FAIR VALUE.
We measure many financial assets and liabilities at fair value (called current market value originally in SFAC 5 Also, we use fair values when determining whether the value of nonfinancial assets like property, plant, equipment and intangible assets has been impaired. Given the complexity and growing importance of this measurement attribute, we discuss it in some detail. ADS