According to the Monetary Unit Assumption, how should historical costs be reported?

The Monetary Unit Assumption is a fundamental accounting principle that states financial transactions should be recorded in a stable currency and that the money used in accounting is consistent over time. In accordance with this principle, historical costs—the original amount paid for assets—should remain unchanged on the financial statements, even if the market value fluctuates over time. This approach ensures that financial records are reliable and comparable across periods without the distortions that could arise from fluctuations in market values or inflation.

Historical cost accounting provides a reliable and objective basis for valuing assets since it relies on actual transactions rather than estimates or subjective valuations. This consistency aids stakeholders, such as investors and analysts, in comparing financial results over time, understanding the company's performance, and making informed decisions based on objective financial data.