IFRS and US GAAP authorised CMUCPP automatically maintains the constant purchasing power of constant real value non-monetary items (e.g. capital, all items in shareholders´ equity, provisions, salaries, wages, pensions, taxes, trade debtors/creditors, etc) only when updated in terms of the Daily CPI during low and high inflation, hyperinflation and deflation - ceteris paribus. European Accounting Association: "Capital maintenance is a competing objective of financial reporting."
Two totally different processes of real value erosion in an economy during inflation
There are two totally
different processes of real value erosion involved in an economy during
(1) One eroding the
real value of only monetary items not inflation-adjusted daily in terms of a
Daily CPI, namely, the economic process of inflation and
(2) A totally different
one eroding only the real value of constant real value non-monetary items not
maintained constant daily, namely, the implementation of the Generally Accepted
Accounting Practice of applying the stable measuring unit assumption during
inflation under HCA as authorized in IFRS in 1989.
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