original cost
Original cost is the actual amount a business paid to buy an asset, including all the costs of getting it ready to use, before any wear and tear is subtracted.
In plain English
Uncle Femi runs a printing press in Ibadan, and he still remembers the day he bought his big colour printer for ₦2,800,000 back in 2019. He likes to remind his son that the machine did more than cost ₦2,800,000 flat. There was ₦150,000 for transporting it from Lagos, ₦80,000 for the electrician who wired it properly, and ₦40,000 for the technician who came to install and test it before the first job ran through it.
Add all of that together and you get the original cost of the printer, which is ₦3,070,000. This is the number Femi's accountant writes down first, before any depreciation is calculated. It is the honest, full price of bringing that asset into the business and making it ready to earn money, more than the sticker price the seller quoted.
This idea matters everywhere business happens. A logistics company in Lagos buying a delivery van records the van's price, registration, number plates, and any modification cost as one figure. A small manufacturer in Manchester buying a second hand lathe machine does the same thing, adding shipping and setup fees to the purchase price. Even a Nigerian in London who buys a laptop purely for freelance work and wants to claim it as a business asset should keep the receipt for the machine plus whatever she spent setting it up, because that combined figure is the true original cost.
Original cost stays fixed on the books once it is recorded, even as the asset ages and loses value. It becomes the starting point from which depreciation is subtracted year after year, so understanding it properly is really the foundation for understanding how a business tracks the true worth of everything it owns.
A bakery in Enugu buys an industrial oven for ₦1,200,000, pays ₦60,000 to transport it and ₦30,000 to have a technician install and test it. The original cost recorded in the books is ₦1,290,000, more than the ₦1,200,000 price tag.
Questions people ask
Is original cost the same as market value?
No. Original cost is what you actually paid to acquire and set up the asset. Market value is what it could sell for today, which changes constantly with demand and condition, while original cost stays fixed once recorded.
Does original cost include repairs done later?
Not routine repairs. Only costs incurred to get the asset ready for its first use, such as delivery, installation, and testing, are added. Repairs done months or years later are treated as separate expenses, not part of original cost.
Why does original cost matter if the asset has already lost value?
Because depreciation is calculated from that original figure. Without knowing the true original cost, a business cannot correctly work out how much value the asset has lost each year, which affects profit calculations and tax.
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