Lesson Plan

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Lesson Plan
Grade: Date: 17/01/2026
Subject: Accounting
Lesson Topic: historic cost
Learning Objective/s:
  • Describe the historic cost convention and its purpose.
  • Explain at least three limitations of historic cost accounting.
  • Compare historic cost with fair‑value measurement in terms of relevance and reliability.
  • Analyse the impact of inflation on asset values recorded at historic cost.
  • Apply a simple numerical example to illustrate profit understatement.
Materials Needed:
  • Projector and screen
  • Whiteboard and markers
  • Printed handout with key limitations table
  • Worksheet containing the machinery example
  • Calculators
  • Slide deck for mini‑lecture
 Introduction:
Imagine a machine bought for $50,000 that is now worth $80,000 – why does the balance sheet still show $50,000? Review what you already know about recording assets and depreciation. By the end of the lesson you will be able to list the main limitations of historic cost, compare it with fair value, and solve a simple inflation example.
Lesson Structure:
  1. Do‑now (5'): Quick quiz on how assets are initially recorded.
  2. Mini‑lecture (10'): Define historic cost, present the five key limitations.
  3. Group activity (12'): Work through the $50,000 machinery example and calculate the understatement of assets and profit.
  4. Comparison discussion (8'): Use the provided table to contrast historic cost with fair‑value measurement.
  5. Guided practice (10'): Students complete a worksheet applying the concepts to a new scenario.
  6. Exit ticket (5'): Write one limitation and its effect on financial statements.
Conclusion:
We revisited the historic cost convention, highlighted why it can become irrelevant, and saw how fair value can address those issues. Collect the exit tickets and assign homework: find a real‑world case where a company revalued an asset and summarise the impact on its financial statements.