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Monday, 28 January 2013

How to automatically maintain your compay´s capital (equity) constant in real value


How to automatically maintain your compay´s capital (equity) constant in real value

 

Stop the stable measuring unit assumption (i.e. stop Historical Cost Accounting).

Guidance

1.                  Implement IFRS-authorised Capital Maintenance in Units of Constant Purchasing Power in terms of a Daily Index.

2.                  Keep no monetary item overnight unless it is inflation-indexed on a daily basis during inflation.

3.                  Your General Conditions of Sale (Contracts) has to state that outstanding receivables and payables will be measured in units of constant purchasing power on a daily basis in terms of a Daily Index from the date of sale (contract) till the date of settlement.

Do not ask the IASB for guidance in this issue. They do not understand IFRS-authorised CMCUPP. Contact me for guidance at realvalueaccounting[at]yahoo.com.


Nicolaas Smith
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