Question: A first-time shareholder has approached you requesting some advice. The shareholder has received the company's annual report and noticed the following statement in the summary

A first-time shareholder has approached you requesting some advice. The shareholder has received the company's annual report and noticed the following statement in the summary of significant accounting policies: ‘The financial report has been prepared on the basis of historical cost, except for the revaluation of certain non-current assets which is explained in the notes.'

Required

Explain to the shareholder why this statement is included in the accounting policy note.

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