Financial statements should ideally not be printed on hard copy

Financial statements should ideally not be printed on hard copy

Updated on 29-06-2013

Financial statements should ideally always be available only in electronic format under Capital Maintenance in Units of Constant Purchasing Power (CMUCPP) at all levels of inflation and deflation with:

(1) automatic daily inflation-adjusting of all historic and current period monetary items (excluding bank notes and coins which now (2012) cannot be inflation-adjusted daily) in terms of a Daily Consumer Price Index or other daily index (e.g. a daily US Dollar parallel rate only during hyperinflation) which recognizes all - normally daily - changes in the general price level always at the current (today´s) rate. 

The net monetary loss or gain is required to be calculated and accounted as a separate item in the profit and loss account when current period monetary items are not inflation-adjusted daily under CMUCPP. 

Monetary items constitute the money supply

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 of 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.

(2) daily measurement of variable real value non-monetary items in terms of IFRS excluding the stable measuring unit assumption and the cost model in the valuation of property, plant, equipment and investment property after recognition.

Current period and historic variable items are required to be updated daily in terms of a Daily CPI or other daily index which recognizes all - normally daily - changes in the general price level when not measured daily in terms of IFRS.

Variable item impairment losses are treated in terms of IFRS.

Variable real value non-monetary items are non-monetary items with variable real values over time.

Examples include quoted and unquoted shares, property, plant, equipment, inventory, intellectual property, goodwill, foreign exchange, finished goods, raw material, etc.

(3) constant real value non-monetary items should always and everywhere be measured in units of constant purchasing power in terms of a Daily Consumer Price Index or other daily index (e.g. a daily US Dollar parallel rate only during hyperinflation) which recognizes all - normally daily - changes in the general price level always at the current (today´s) rate.

The net constant purchasing power loss or gain is required to be calculated and accounted when constant items are not measured in units of constant purchasing power on a daily basis.

Examples include borrowing costs, comprehensive income, interest paid, interest received, bank charges, royalties, fees, short term employee benefits, pensions, salaries, wages, rentals, all other income statement items, issued share capital, share premium accounts, share discount accounts, retained earnings, retained losses, capital reserves, revaluation surpluses, all accounted profits and losses, all other items in shareholders´ equity, trade debtors, trade creditors, dividends payable, dividends receivable, deferred tax assets, deferred tax liabilities, all taxes payable, all taxes receivable, all other non-monetary payables, all other non-monetary receivables, provisions, etc.

Nicolaas Smith

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