Financial Statement Valuations in Italian Accounting Thought between the 19th and the 20th Century : From 'Exchange Value' to 'Historical Cost'

The main subject of this paper is the theory of financial statement valuations observed in its historical development. More notably, regarding the subject, the research is concerned with some theoretical concepts developed by the Italian doctrine in a very specific age, namely, between the 19th and the 20th century, which in fact, devoid of any accounting regulation. This paper analyzes in particular the shift from the exchange value rule to the historical cost method and tries to explain the reasons of such a development. In the second half of the 19th century, some of the best Italian scholars, who were faced with the need to properly develop the problem of accounting valuations, thought that it was appropriate to rely on concepts that belonged to similar sciences, such as economics and real estate appraisal, by blindly borrowing the theory of value from the former and the theory of valuations from the latter. During that age, everything hinged around the concept of exchange value. At the dawn of the 20th century, the Italian accounting doctrine began to wonder about a subject that was crucial to the financial statement theory: the informative purposes underlying the financial statements. At the same time, the first principle took shape, which might be called as the “finalistic principle of value”. It is still the basis of the theory of financial accounting measurements, for which different evaluative criteria must be applied to different informative purposes. Thus, an alternative criterion to that of the exchange value makes its appearance on the scene of the accounting valuations, notably the historical cost. The introduction of the historical cost criteria and above all the relinquishment of the combination of the “economic cost” in favor of that of the “manufacturing cost” allow the Italian accounting to get rid of the theories of economics and real estate appraisal, thus, becoming independent regarding the financial statement valuations