This concept is correct if the asset is a scarce resource or asset that cannot be replaced at a lower than the recoverable value? A typical example is that of a trading company that buys coffee in bulk (at $100 per kg) and sells it to retailers (at $150 per kg) and individuals (at $200 per kg). What is the cost of the coffee (asset) to the company for selling the coffee to retailers?
One could be the replacement cost,which means the price that the company will pay if it buys the asset from the market ($100 per kg). Another one could be the recoverable value of the asset, which means the amount the company can get if it were to sell the asset to retailers ($150 per kg) or use it to generate revenue for long-term economic benefit (keep it and sell it to individuals at $200 per kg.)