Replacement cost

(RC).

1. Derivatives.

The current fair value of a derivatives contract, representing the amount that would need to be paid to replace the contract now, in the event of the failure of the derivative counterparty.

2. Financial reporting.

In current cost accounting, the current market cost of replacing inputs, rather than their historical cost.

See also

• Counterparty
• Current cost accounting
• Derivative instrument
• Fair value
• Potential Future Exposure
• Replacement cost risk