Historical Cost Concept

Hi all, IAS is my nightmare. i read and read then i forget. let me test myself .
Assets are valued at the cost that they are purchased. overstates profit understates asset value in times of enflation.
waiting for your comments:))

ohhh, thank you for your reply, It seems that you are running this forum.:)

Historic cost values non-current assets at original cost less depreciation.

In times of high inflation it means the value in the balance sheet is understated.

Also, because the depreciation is based on original cost, it means the depreciation expense is understated and therefore the profit is overstated.