Monday, 9 January 2012

Elements of an economic item under CIPPA

Elements of an economic item under CIPPA

Under CIPPA an economic item consists of three elements:
(1)       the value of the item expressed in terms of unstable money,
(2)       the date of the event / exchange / transaction / contract and
(3)       the nominal value of the daily index or daily monetized indexed unit of account or daily relatively stable foreign currency parallel rate on that date.

All items are valued at the original date and thereafter daily (more often during severe hyperinflation when the parallel rate can change more than once a day) at all future dates in terms of IFRS, excluding the stable measuring unit assumption and the IFRS definitions of monetary items in 2011, implementing financial capital maintenance in units of constant purchasing power in terms of a daily rate at all levels of inflation and deflation always with reference to the daily rate at the original date.
The nominal monetary value of, for example a constant item changes daily in terms of the daily rate, but its real value is maintained constant over time at all levels of inflation and deflation under CIPPA.

Nicolaas Smith

Copyright (c) 2005-2012 Nicolaas J Smith. All rights reserved. No reproduction without permission.

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