12-23-2006, 08:01 PM
Historical Cost Accounting is the global basic accounting model. It recognizes two economic items
Monetary items (money and certain non-monetary items mistakenly classified as monetary items â in terms of the International Accounting Standards Boardâs definition).
Non-monetary items Variable real value non-monetary items valued at fair value, market value, present value, net realizable value or recoverable value and Historical Cost items based on the stable measuring unit assumption which makes these items equal to monetary items in the case of the issued capital of companies with no well located and well maintained land and/or buildings equal to the original real value of issued capital and in companies´ Retained Income balances.
The split between variable and constant real value non-monetary items is conveniently side-stepped by the accounting profession as a result of the stable measuring unit assumption.
It is known that the functional currency's real value is constantly being destroyed by cash inflation â but, this is mistakenly regarded as of not sufficient importance to adjust the real values of constant real value non-monetary items in the financial statements.
They are valued at HC which results in the destruction of the real value of issued capital and Retained Income (see above).
Accountants are responsible for the destruction of the real value of Retained Income equal to the annual average value of Retained Income times the average annual rate of inflation/hyperinflation.
Should this value be specified in the Audit Report?
Constant Item Purchasing Power Accounting (http//realvalueaccounting.blogspot.com/)
Three economic items
I. Monetary items (only money and accounted monetary values pertaining only to money)
II. Variable real value non-monetary items (the same as under HCA excluding the stable measuring unit assumption).
III. Constant real value non-monetary items
Constant Item Purchasing Power Accounting (http//realvalueaccounting.blogspot.com/) stops the destruction of real value in constant real value non-monetary items.
Monetary items (money and certain non-monetary items mistakenly classified as monetary items â in terms of the International Accounting Standards Boardâs definition).
Non-monetary items Variable real value non-monetary items valued at fair value, market value, present value, net realizable value or recoverable value and Historical Cost items based on the stable measuring unit assumption which makes these items equal to monetary items in the case of the issued capital of companies with no well located and well maintained land and/or buildings equal to the original real value of issued capital and in companies´ Retained Income balances.
The split between variable and constant real value non-monetary items is conveniently side-stepped by the accounting profession as a result of the stable measuring unit assumption.
It is known that the functional currency's real value is constantly being destroyed by cash inflation â but, this is mistakenly regarded as of not sufficient importance to adjust the real values of constant real value non-monetary items in the financial statements.
They are valued at HC which results in the destruction of the real value of issued capital and Retained Income (see above).
Accountants are responsible for the destruction of the real value of Retained Income equal to the annual average value of Retained Income times the average annual rate of inflation/hyperinflation.
Should this value be specified in the Audit Report?
Constant Item Purchasing Power Accounting (http//realvalueaccounting.blogspot.com/)
Three economic items
I. Monetary items (only money and accounted monetary values pertaining only to money)
II. Variable real value non-monetary items (the same as under HCA excluding the stable measuring unit assumption).
III. Constant real value non-monetary items
Constant Item Purchasing Power Accounting (http//realvalueaccounting.blogspot.com/) stops the destruction of real value in constant real value non-monetary items.