Much of the information contained in the balance sheet is reported on a historical cost basis.

This means that such assets as land are reported at the amount that was originally paid for the item when purchased. Alternative possible reporting methods include current value, what a similar item would currently cost to acquire, and liquidation value, the amount an entity would receive if it was forced to sell the item.

Discuss how the concepts of relevance, faithful representation, and going concern influence the choice of historical cost as a reporting method.