Historical Cost vs Fair Value is a concept of accounting that refers to the difference between the values placed on assets or items based on their purchase price and what they might be worth if they were to be sold today. Historical cost is an item’s original purchase price, while fair value is typically determined by current market conditions. The aim of this concept is to ensure an accurate record of an asset’s monetary value within an organization’s accounts and financial statements. By using both historical cost and fair value, businesses are able to get a more complete picture of the value of their assets and liabilities.