The historical cost principle requires that assets be valued at their cost when they were acquired.

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The historical cost principle, which is a fundamental accounting concept, requires that assets be recorded at their acquisition cost. This means that the initial cost of an asset, including any taxes, transportation, and installation fees, should be the basis for its valuation on the balance sheet. This principle ensures that financial statements are reliable and comparable across organizations and time periods. Therefore, a company cannot revalue its assets based on fluctuations in market prices or changing economic conditions.

The Historical Cost Principle Requires That Assets Be Valued at Their