IFRS and US GAAP authorised CMUCPP 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) in terms of a Daily CPI in entities that at least break even in real value during low and high inflation, hyperinflation and deflation - ceteris paribus. European Accounting Assoc: "Capital maintenance is a competing objective of financial reporting."
The generally accepted, globally implemented,
traditional Historical Cost Accounting model, i.e., financial capital
maintenance in nominal monetary units, does not result in maintaining the real
value of capital constant during inflation and deflation since this is
impossible, per se.
changes’ are considered by PricewaterhouseCoopers and all
Historical Cost accountants to be 26 per cent inflation for three years in a
row, i.e., 100 per cent cumulative inflation over three years, the generally
accepted definition of hyperinflation by millions of accountants worldwide who
follow the IASB´s definition of hyperinflation.A few academics, particularly Prof Steve Hanke, very unscientifically do
not recognize the IASB´s generally accepted definition of hyperinflation. These
few academics follow Cagan´s definition of 50 per cent inflation per month.
Thus PricewaterhouseCoopers, the IASB and all
Historical Cost accountants consider inflation of 15 or 20 per cent per annum
as not dramatic and would not require the implementation of IAS 29. This is
obviously a mistake. This is in the process of being corrected by the IASB. This
however takes a very long time via the IFRS process. The Argentinian Accounting
Federation submitted a proposal, entitled ‘IFRS X INFLATION’ to the IASB in
2010 which proposes changes to the accounting model at inflation of 10 per annum
or cumulative inflation of 26 per cent over three years. I amended the
Argentinian Federation´s proposal in January 2012 to ‘IFRS X CAPITALMAINTENANCE IN UNITS OF CONSTANT PURCHASING POWER’. The IASB voted unanimously
in May 2012 to make the replacement of IAS 29 a research project in the future.
This research project has not jet started at the IASB.
The implementation of the very destructive stable
measuring unit assumption, even at 2 per cent inflation per annum, results in
the erosion (destruction) of hundreds of billions of US Dollars in the real
value of constant real value non-monetary items per annum in the world economy.
PricewaterhouseCoopers, the IASB and most HC accountants do not understand
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