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Tuesday, 15 April 2008

SA accountants destroy real value on a massive scale.

The real economy is being destroyed in the following manner: Accountants value VARIABLE real value non-monetary items correctly in terms of International Accounting Standards at market value or the lower of cost or realisable value or fair value or present value or recoverable value.

Unfortunately SA accountants assume that money is PERFECTLY stable ONLY for the purpose of valuing CONSTANT real value non-monetary items, eg. retained income. SA accountants thus destroy all CONSTANT real value non-monetary items NEVER updated, eg. retained income, at 9.8% per annum.

They also destroy some part (less than 9.8% per annum) of all other CONSTANT real value non-monetary items that are NOT FULLY updated, eg. salaries, wages, rent, fees, royalties, value added taxes, income taxes, company taxes, rates, issued share capital, etc.

When SA accountants stop their silly assumption that money is PERFECTLY stable ONLY for this single purpose, SA will have 0% inflation in all CONSTANT real value non-monetary items since they will all be updated at the monthly inflation rate.

SA accountants destroy real value on a massive scale. This is very easy to prove from company to company.

It is easy to stop too: just stop the stable measuring unit assumption, that is, stop assuming money is PERFECTLY stable ONLY for the purpose of valuing CONSTANT real value non-monetary items.