The historical cost principle states that assets should be recorded at the cost of the consideration given at the time of acquisition, and the conservatism principle states that companies cannot report assets at amounts greater than their historical cost.

For instance, if a company purchases land for $100,000 in 1950, it must be reported at $100,000 in their 2013 balance sheet even if the fair market value of the land is actually $10,000,000.

In chapter 16, we learned that companies, under the cost method, are required to adjust the values of their securities portfolios so that they are reported at fair market value, which often results in reporting investments at amounts *higher* than their historical cost.

Isn't this a violation of the historical cost and conservatism principles, and why are investments in securities treated differently than an asset like land?