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 IFRS definitions of
monetary items in IAS 29, Par. 12 and IAS 21, Par. 8 need to be improved
because non-monetary items are all items that are not monetary items. The
definition of monetary items thus determines which items are non-monetary items
per IFRS. When the definition of monetary items is incorrect then the division of
monetary and non-monetary items is incorrect as it currently is in terms of
IAS 29, Par. 12
'Monetary items are money held and items to be received or paid in money'
IAS 21, Par. 8
'Monetary items are units of currency held and assets and liabilities to be received or paid in a fixed or determinable number of units of currency.'
Monetary items constitute the Money supply.
Updated on 11-05-2013
Examples of units of money
held are bank notes and coins of the fiat currency created within an economy by
means of fractional reserve banking. Examples of items with an underlying
monetary nature which are substitutes for money held include the capital amount
of: bank loans, bank savings, credit card loans, car loans, home loans, student
loans, consumer loans, commercial and government bonds, Treasury Bills, all
capital and money market investments, notes payable, notes receivable, etc.
when these items are not in the form of money held.
Copyright (c) 2005-2012 Nicolaas J Smith. All rights reserved. No reproduction without permission.