Three meanings come to mind when you ask about principles of accounting...
1. Principles of Accounting was often the title of the introductory course in accounting. It was also common for the textbook used in the course to be entitled Principles of Accounting.
2. Principles of accounting can also refer to the basic or fundamental accounting principles: cost principles, matching principles, full disclosure principles, materiality principles, going concern principles, economic entity principles, and so on. In this context, principles of accounting refers to the broad underlying concepts which guide accountants when preparing financial statements.
3. Principles of accounting can also mean generally accepted accounting principles (GAAP). When used in this context, principles of accounting will include both the underlying basic accounting principles and the official accounting pronouncements issued by the Financial Accounting Standards Board (FASB) and its predecessor organizations. The official pronouncements are detailed rules or standards for specific topics.
Accounting principles are the common rules that must be followed when preparing financial statements that will be distributed to people outside of the company (or other organization).
The accounting principles include the basic underlying guidelines and assumptions such as the cost principle, matching principle, full disclosure principle, revenue recognition principle, industry-specific regulatory rules, materiality, conservatism, consistency, and others.
In the U.S. the accounting principles also include the many complex detailed rules that are established and maintained by the Financial Accounting Standards Board (FASB).
The combination of the basic underlying guidelines and the complex detailed accounting rules are referred to as US GAAP or GAAP. GAAP is the acronym for generally accepted accounting principles.
What is GAAP?
GAAP is the acronym for generally accepted accounting principles. In the U.S. that means
1. the basic accounting principles and guidelines such as the cost principle, matching principle, full disclosure, etc.,
2. the detailed standards and other rules issued by the Financial Accounting Standards Board (FASB) and its predecessor the Accounting Principles Board, and
3. generally accepted industry practices.
GAAP must be adhered to when a company distributes its financial statements outside of the company. If a corporation's stock is publicly traded, the financial statements must also adhere to rules established by the U.S. Securities and Exchange Commission (SEC). This includes having its financial statements audited by an independent CPA firm.
The consistency principle requires accountants to be consistent from one accounting period to another in applying accounting principles, methods, practices, and procedures. In other words, the readers of a company's financial statements can presume that the same rules and measurements were followed in all of the years being reported. If a change is made to a more preferred accounting method, the effects of the change must be clearly disclosed.
The Financial Accounting Standards Board refers to consistency as one of the characteristics or qualities that makes accounting information useful.
An intangible asset is an asset that you cannot touch. Examples of intangible assets include copyrights, patents, mailing lists, trademarks, brand names, domain names, and so on.
Often the market value of an intangible asset is far greater than the market value of a company's tangible assets such as its buildings and equipment.
Accounting principles require that intangible assets be reported on a company's balance sheet at cost or less. Since many intangible assets are not purchased, they may not have a reportable cost. As a result, many valuable intangible assets are not even reported as assets on the company's balance sheet.
The basic or fundamental principles in accounting are the cost principle, full disclosure principle, matching principle, revenue recognition principle, economic entity assumption, monetary unit assumption, time period assumption, going concern assumption, materiality, and conservatism. The last two are sometimes referred to as constraints. Rather than distinguishing between a principle or an assumption, I prefer to simply say that these ten items are the basic principles or the underlying guidelines of accounting. (My reason is that accounting principles also include the statements of financial accounting standards and the interpretations issued by the Financial Accounting Standards Board and its predecessors, as well as industry practices.)
There are also "qualities" of accounting information such as reliability, relevance, consistency, comparability, and cost/benefit.
I will assume that the plant assets' liquidation values are higher than the present carrying values when answering your question.
Plant assets (buildings and equipment used in manufacturing; also called fixed assets) are not reported at their higher liquidation value because of several accounting principles. Below are four accounting principles that come to mind.
The cost principle requires that plant assets be reported at amounts that are not greater than cost. Cost is an objective and verifiable amount. Liquidation value is subjective and the amount can vary significantly depending on the assumptions made.
The matching principle requires that the cost of plant assets be allocated to depreciation expense. This means that over a plant asset's useful life some of the plant asset cost is matched with revenues on the income statement. Therefore the plant asset's carrying amount will be decreasing each period.
The going concern assumption implies that the company will be continuing in business. Since it is assumed that the company is not liquidating, the liquidation value of the plant assets is not relevant.
The revenue recognition principle prohibits a company from showing a gain from merely holding a plant asset. What would you credit if you increased the plant asset amount?
Those four accounting principles provide some of the rationale for not reporting the liquidation value when it is higher than cost.
If a company is not a going concern or if the plant asset's value has been impaired, the above rationale does not hold. For those situations you will need to follow the appropriate accounting rules.