06-28-2007, 04:05 AM
<blockquote id="quote"><font size="1" face="Verdana, Tahoma, Arial" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by Astute Accountant</i>
<br />Yes Nick, this really is a short coming of historical cost accounting that it doesnât take account of inflation and does assume that the currencies of the countries remain stable.
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
It destroys USD 30 Billion in the real value of just 30 companies in the US every single year. Yes, USD 30 Billion in only 30 companies. Obviously the 30 Dow companies. Each and every year as it has been doing for the last 600 years in all companies´ retained income balances.
I estimate, conservatively, that accountants world wide destroy at least USD 200 Billion in the real value of companies´ retained income balances each and every year. Retained income can be declared as dividends. So accountants destroy at least USD 200 Billion in shareholder value each and every year.
Any company can freely revoke the stable measuring unit assumption.
The IASB´s International Accounting Standards and International Financial Reporting Standards do to prescibe which basic accounting model has to be used.
They only state
âIn most countries, primary financial statements are prepared on the historical cost basis of accounting without regard either to changes in the general level of prices or to increases in specific prices of assets held, except to the extent that property, plant and equipment and investments may be revalued.â
No-one stops you from revoking the stable measuring unit assumption.
It is easy to see what your company will gain per annum your company´s average annual retained income times the average annual inflation rate.
<br />Yes Nick, this really is a short coming of historical cost accounting that it doesnât take account of inflation and does assume that the currencies of the countries remain stable.
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
It destroys USD 30 Billion in the real value of just 30 companies in the US every single year. Yes, USD 30 Billion in only 30 companies. Obviously the 30 Dow companies. Each and every year as it has been doing for the last 600 years in all companies´ retained income balances.
I estimate, conservatively, that accountants world wide destroy at least USD 200 Billion in the real value of companies´ retained income balances each and every year. Retained income can be declared as dividends. So accountants destroy at least USD 200 Billion in shareholder value each and every year.
Any company can freely revoke the stable measuring unit assumption.
The IASB´s International Accounting Standards and International Financial Reporting Standards do to prescibe which basic accounting model has to be used.
They only state
âIn most countries, primary financial statements are prepared on the historical cost basis of accounting without regard either to changes in the general level of prices or to increases in specific prices of assets held, except to the extent that property, plant and equipment and investments may be revalued.â
No-one stops you from revoking the stable measuring unit assumption.
It is easy to see what your company will gain per annum your company´s average annual retained income times the average annual inflation rate.
