Friday, 6 January 2012

Examples of constant real value non–monetary items

Examples of constant real value non–monetary items
Definition Constant items are non–monetary items with constant real values over time.

Examples are salaries, wages, pensions and other employee benefits to be settled in cash; provisions that are to be paid in cash, dividends to be paid in cash that are recognised as liabilities, prepaid amounts for services and goods (e.g. rent prepaid), wages,  rentals, all other income statement items as well as balance sheet constant items, e.g. issued share capital, retained earnings, capital reserves, share issue premiums, share issue discounts, revaluation surplus, all other shareholder’s equity items, provisions, trade debtors, trade creditors, provisions, taxes payable and receivable, deferred tax assets and liabilities, dividends payable and receivable, royalties payable and receivable, all other non–monetary payables and receivables, etc.

Constant items are fixed in terms of real value while their nominal values change daily in terms of a Daily Consumer Price Index (DCPI) during low inflation, high inflation and deflation.

Nicolaas Smith

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