Historical Cost Principle
Accounting glossary · Understand, connect, apply
Historical cost is a measurement basis that starts from the amount paid or other consideration given to acquire an asset, including qualifying costs of bringing it into use.
Example
Equipment bought for $5,000 with $200 of necessary installation costs may initially be recorded at $5,200.
Remember the difference
Later depreciation, impairment or other adjustments may change carrying amount. Historical cost does not mean every asset remains at its original amount forever.
Updated 3 November 2026. Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.
Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.
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