Impact of Historical Cost and Fair Value on Selected Financial Ratios: A Study in Listed Plantation Companies under Colombo Stock Exchange (CSE).

Management Studies and Commerce

The main focus of this study is to identify impact of historical cost and fair value on selected financial ratios of selected listed plantation companies in Colombo Stock Exchange (CSE) from the financial year 2009/10 to 2014/15. International financial reporting standard (IFRS) very clearly states that biological assets which mean living plants and animals must be carried at fair value. Also IFRS suggests that agricultural assets must be carried at their net fair value when they were harvested. After the adoption of international financial reporting standard in Sri Lanka, many corporate specially listed plantation companies started to adopt the fair value as a measurement for historical cost base from the financial year 2012/2013. There are several measurement techniques are available such as historical cost, current cost, fair value and present value.This study covers three financial years (2009/10 to 2011/12) under the historical cost base measurement as well as three financial years (2012/13 to 2014/15) under the fair value base measurement. Descriptive statistics and inferential statistics of this study confirmed that there is mean differences in the financial ratios under the historical cost and fair value measurement however there is no significant mean differences in the financial ratios under the historical cost and fair value measurement.

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