tag:blogger.com,1999:blog-5350461476249821761.post3084112942530446022..comments2023-10-30T09:30:40.020+00:00Comments on Capital Maintenance in Units of Constant Purchasing Power in terms of the Daily CPI: Financial capital maintenance in units of constant purchasing power during hyperinflation is authorized in current IFRSUnknownnoreply@blogger.comBlogger2125tag:blogger.com,1999:blog-5350461476249821761.post-40294988529930842152012-09-27T10:37:53.274+01:002012-09-27T10:37:53.274+01:00Hi Saleem,
Thank you for the visit and comment.
...Hi Saleem, <br /><br />Thank you for the visit and comment.<br /><br />Financial capital maintenance in units of constant purchasing power is the same as Constant Item Purchasing Power Accounting at all levels of inflation and deflation, including durin hyperinflation.<br /><br />It is a departure from Historical Cost Accounting. The fundamental difference is that the stable measuring unit is never implemented under financial capital maintenance in units of constant purchasing power. Everything is done at real value: in Managerial Accounting too. I take it you equat Managerial Accounting to Cost and Management Accounting. <br /><br />Simply take any item in Managerial Accounting and update it to its current real value, i.e. it´s value today at today´s Daily CPI. <br /><br />First you will have to find the Daily CPI for your country. If your government issues government capital inflation-indexed bonds, then you already have a Daily CPI in your country. The Daily CPI for your country is the one or two month lagged daily interpolated index that is used in your country to price your government inflation-indexed bonds on a daily basis: these bonds are bought and sold on a daily basis in your country´s capital markets.<br /><br />All you do then is multiply any item in your Managerial Accounts by the update factor you derive from dividing the value of your Daily CPI today, with the value of the Daily CPI on the date the item was purchased / came about / was contributed / etc. Then you have its real value today. <br /><br />Since the Daily CPI changes daily, all your Managerial Accounts values change daily in terms of the daily changing Daily CPI. <br /><br />There you have it. <br /><br />Obviously you have to abandon the Historical Cost Accounting model and change over to the Financial Capital Maintenance in Units of Constant Purchasing Power model (which is the same as Constant Item Purchasing Power Accounting) in your financial accounting. <br /><br />This is authorized at all levels of inflation and deflation, including during hyperinflation, in The Conceptual Framework (2010), Par. 4.59 (a).<br /><br />Financial Capital Maintenance in Units of Constant Purchasing Power is the same as Constant Item Purchasing Power Accounting. Why don´t you buy the book? It is only USD 2,99. <br /><br />Kind regards,<br /><br />Nicolaas SmithNicolaas Smithhttps://www.blogger.com/profile/05161767723892390778noreply@blogger.comtag:blogger.com,1999:blog-5350461476249821761.post-64022262741505648852012-09-26T10:40:16.602+01:002012-09-26T10:40:16.602+01:00Hi I like your article regarding Financial capital...Hi I like your article regarding Financial capital maintenance in units of constant purchasing power during hyperinflation is authorized in current IFRS<br />but I will love if you write about <a href="http://www.renthousesargodha.com" rel="nofollow">Managerial accounting</a> too. Saleem Mumtazhttps://www.blogger.com/profile/14916301689676479072noreply@blogger.com