06-22-2007, 02:38 AM
Can you see that you as your company´s accountant are destroying your company´s retained income right now at the rate of inflation because you implement the stable measuring unit assumption?
You are free to implement Real Value Accounting.
What will you gain from revoking the stable measuring unit assumption?
Here is the value for your company take the average value of your retained income in your balance sheet for the last 12 months and multiply it by the average increase in inflation over the last 12 months. For example for every USD 1 million in average retained income at an annual inflation rate of 2% implementing Real Value Accounting is worth USD 20 000 for you for an unlimited period of time - all else except inflation being equal. Over the next 30 years that would be worth USD 600 000 to your company.
Obviously for every USD 1 Billion of retained income implementing Real Value Accounting would be worth USD 20 million immediately and USD 600 million over the next 30 years.
Makes you think, doesn´t it?
You are free to implement Real Value Accounting.
What will you gain from revoking the stable measuring unit assumption?
Here is the value for your company take the average value of your retained income in your balance sheet for the last 12 months and multiply it by the average increase in inflation over the last 12 months. For example for every USD 1 million in average retained income at an annual inflation rate of 2% implementing Real Value Accounting is worth USD 20 000 for you for an unlimited period of time - all else except inflation being equal. Over the next 30 years that would be worth USD 600 000 to your company.
Obviously for every USD 1 Billion of retained income implementing Real Value Accounting would be worth USD 20 million immediately and USD 600 million over the next 30 years.
Makes you think, doesn´t it?
