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    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?
    A Materiality Principle Correct Answer Incorrect Answer
    B Matching Principle Correct Answer Incorrect Answer
    C Historical Cost Convention Correct Answer Incorrect Answer
    D Going Concern Assumption Correct Answer Incorrect Answer

    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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