Final answer:
Recognition of holding gains on inventory is not allowed under historical cost accounting, where inventory is valued at its original cost without recognizing unrealized market value gains.
Step-by-step explanation:
Recognition of holding gains on inventory is not permitted under historical cost accounting principles. Under these principles, inventory is recorded and held on the balance sheet at its original cost, and any unrealized gains due to changes in market value are not recognized as income until the inventory is actually sold. This is in line with the conservative nature of accounting, which seeks to present a company's financial situation in a cautious manner to avoid overstating income. The three principles you mentioned relate to a theory of justice proposed by the philosopher John Rawls, but they do not apply to financial accounting.
Recognition of holding gains or losses is strictly about how changes in asset values are reported for accounting purposes and is based on the conceptual framework established by financial accounting standards boards. Recognition of holding gains on inventory is not permitted under the Principles of Justice in acquisition and transfer. These principles govern how individuals are entitled to property or holdings. According to these principles, a person is only entitled to a holding if they acquire it in accordance with the Principle of Justice in acquisition or transfer, and no one is entitled to a holding except through the repeated application of these principles.