Reproduction Cost
Categories: Accounting
Ever seen figures about how much it costs to raise a kid? Diapers, food, summer camps, bail money, college funds. All these add up to form one kind of reproduction cost. (And extensive birth control.)
Another form (the one we're concerned about here) refers to the cost it would take to identically reproduce some asset. The idea of reproduction cost runs counter to the idea of replacement cost. Replacement costs measure the amount of replacing an asset with something that has similar functionality. Reproduction cost replaces an asset with something that is virtually identical.
The terms come up as part of insurance policies. The fine print of the coverage might spell out whether the insurance company will provide you with replacement costs or reproduction costs.
You have a canoe that's been hand-carved from a single piece of redwood by a secret tribe of dedicated canoesmiths. It cost you $100,000. The canoe gets stolen off the top of your car one day while you stopped at a rest station. If you have a policy that covers reproduction costs, you might get that $100,000 for another hand-carved canoe. If it only covers replacement costs...you might have to settle for a $1,000 fiberglass model.
