Question
A company purchased land in 2010 for ₹10 lakh. In
2025, its market value rose to ₹60 lakh. However, the company continues to record it at ₹10 lakh. Which accounting principle justifies this treatment?Solution
Assets are recorded at the original purchase price, not market value, based on the historical cost concept. Unrealized gains are not recognized unless realized through sale.
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