Jumat, 23 Maret 2012

FINANCIAL REPORTING AND PRICE CHANGES ( CHAPTER 6 )


FINANCIAL REPORTING AND PRICE CHANGES ( CHAPTER 6 )
Understand why the financial report has the potential to mislead during the period of price changes.
Financial Statements May Have The Potential For Misleading Prices During The Period Of Change
This measurement inaccuracies
distort:
1.      financial projections based on historical time series of data
2.      budget is the basis of performance measurement
3.      performance data can not isolate the effect of inflation that can not be controlled
Earnings are valued more in turn will lead to:
·         An increase in the proportion of taxn
·         Demand more dividends than shareholders
·         Salaries and demand higher wages than workers
·         Adverse action of the host country (such as the taxation of a very big advantage).
A.    Effect of inflation on the Company
Inflation affects the financial position and performance of a company, for example, managers can make decisions that are not operating efficiently if he does not understand pegaruh inflation. In regard to the financial position, financial assets will decrease in value during inflation due to reduced purchasing power. Therefore, an alternative system of inflation accounting is introduced, the general purchasing power accounting and current value accounting.
B.     Alternative Accounting Measurements
1)      General Purchasing Power (General Accounting Purchasing Power)
General purchasing power accounting includes all systems designed to maintain the real purchasing power of capital owners to accounting for changes in price levels. The main philosophy is to report the assets, liabilities, income and expense in the monetary unit and the same purchasing power. According to the non-financial GPP in the financial statements be reassessed to reflect the purchasing power of a similarity or a common purchasing power generally at the end of the balance sheet date. As for the financial statements of assets and liabilities in the form of liquid assets typically are not adjusted for purchasing power stable in the period December 31, but other assets, revenues and expenses should be adjusted.
2)      Current Value Accounting (Accounting Flows Current Value)
CVA covers all of the system to calculate the present value or change in the current special price includes cost accounting, accounting and the current replacement price accounting exit / selling price accounting. CVA associated with the rise and fall of the value of certain assets is not diminished purchasing power now, are not considered income.
There are two main approaches in the CVA. First, the current cost / replacement cost (replacement cost) is widely used in non-monetary assets valued asset that is what is sacrificed in his place. Second, the current exit price / selling price / net realiable value (Cost of Sales) assess the asset at the selling price less cost of sales complementary. CVA resulted in the holding gains and losses as non-financial asset be reassessed and more complex management.
3)      Current Value: Accounting GPP
GPP and CVA are combined in the real value system.
C.     IASB on Accounting for Changes in Rates and Inflation.
The first thing shown IASC, or now called IASB regarding inflation accounting that emerged in 1977 in IAS 6, accounting responses to changes the price. At that point, there is no definitive standard both in the United States or in England, and there is uncertainty as to how inflation accounting problem can be solved in two states.
More definitive standard of inflation which does not appear, until in 1981 with the release of IAS 15, the Reflection Effect of Change in Price Information, which supersedes IAS 6. At that time, the FASB issued SFAS 33 on Financial Reporting and Changing Prices.
The main types following information reflects the impacts of price changes that are recommended for disclosure by IAS 15 as follows:
1.      The number of adjustments to depreciation adjustments or amount of property, plant and equipment.
2.       The number or amount of adjustment for the adjustment of cost of goods sold.
3.      Adjustment relating to financial items, the impact of borrowing, or ownership interest when the adjustment has been incorporated into account in determining income under the accounting method adopted.
4.      The overall impact of the results or earnings of adjustment as the other items that reflect the impact of price changes are reported under the accounting method adopted.
5.      When the cost method now adopted, the current cost for property, plant and equipment and supplies.
6.      The method adopted to calculate the information referred to in previous posts, including the nature of the index used.
It is important to make IAS 15 IAS 15 to recognize is that information needs to be disclosed, the impact of price changes and inflation, as well as provide specific guidelines to be followed by various companies to improve the quality of disclosure. The fact that the basic information from one country to another can be different, of course this is a problem, but obviously the accounting profession can not be adapted to the solution of the world.
Knowing inflation accounting terms and understand the influence of price adjustments on the financial statements.

Inflation is a process of rising prices in general and persistent (continuous) associated with the market mechanism can be caused by various factors, among others, increased consumption or a lack of launch distribution of goods.
Inflation is also a process of declining currency value continuously.
Inflation is the process of an event, rather than the high-low price levels. That is, the higher the price level that is considered not necessarily indicate inflation. Inflation is assumed to occur if the price increase takes place continuously and mutually interact. Inflation term is also used to mean an increase in money supply which is sometimes seen as the cause of rising prices. There are many ways to measure the rate of inflation, the two most commonly used is the CPI and the GDP Deflator.
Inflation can be classified into 4 groups:
1.      Mild inflation, mild inflation occurs when prices were below the 10% a year
2.      currently, inflation is between 10% -30% a year
3.      heavy, weighing between 30% -100% a year
4.      and hyperinflation or uncontrollable inflation occurs when prices are above 100% a year.
How Inflation Happen?
1.      Inflation is caused by the pull of demand (demand pull inflation) occurs due to excessive total demand so that there is a change in the price level. Increased demand for goods and services resulting in increased demand for production factors. Increased demand for factors of production that then leads to the input price increases. Thus, inflation occurs because of an increase in total demand as the economy is concerned in a situation of full employment.
for example:
- The increase in government spending financed by printing new money
- The increase in private investment spending because of the ease of bank credit
·         Inflation due to pressure costs (cost push inflation) occurs due to the rising costs of production (input) so that the resulting price of the products (output) generated go up.
For example:
- Increase in production costs, such as rising wages, rising prices of capital
- Reduced number of deals
- Rising prices of goods are accompanied by a drop in production
- Increase in production costs, such as rising wages, rising prices of capital.
2.      Inflation mixture, due to a combination of elements of the pull inflation and cost push inflation.
3.      Imported inflation, due to the influence of foreign inflation and the trade between countries.
For example: a country is experiencing inflation, then the production of the state is required by other countries and imported, the price of goods is increased.
Based on the onset of inflation
·         Inflation of domestic origin (domestic inflation), inflation was caused by the budget deficit and the resulting failure of the market prices of basic necessities to be expensive.
·          Inflation comes from abroad (imported inflation), due to rising prices of goods in other countries, the cost of producing goods overseas is high, the increase of import tariffs of goods
Impact of Inflation Postitif
Inflation has both positive and negative effects of severe, depending on whether or not inflation.
If inflation is mild, it has a positive influence in the sense that can stimulate the economy better, which is increasing the national income and make people eager to work, save and invest.
People who rely on income based benefits, such as employers, are not harmed by inflation.
So it is with employees who work in firms with payroll following the inflation rate.
For people who borrow money from a bank (debtor), inflation is beneficial, because at the time of payment of debts to creditors, the value of money is lower than at the time of borrowing.
Instead, the lender or the lenders will lose money because the value of money return is lower than at the time of borrowing.
For manufacturers, inflation can be profitable if the income is higher than the increase in production costs.
When this occurs, manufacturers will be forced to double its production (usually occurs in large employers). However, when inflation led to rising production costs and eventually harm the producers, the producers are reluctant to continue production. Manufacturers to stop production for a while. In fact, if not able to keep pace with inflation, the business may be insolvent manufacturers (usually occurs in small businesses).

Negative Impact of Inflation
In times of severe inflation, which in the event of uncontrolled inflation (hyperinflation), the state of the economy into chaos and felt sluggish economy. People become excited about working, saving, or investments and production because prices are rising rapidly. The recipients of fixed incomes such as public servants or private employees and the workers will be overwhelmed to bear and keep their prices so that life becomes increasingly degenerate and collapsed from time to time.
For people who have a fixed income, inflation is very detrimental.
We take the example of a retired civil servant in 1990. In 1990, enough retirement money to make ends meet, but in the year 2003-or thirteen years later, the purchasing power of money may be only a half. That is, the pension is no longer enough to make ends meet.
Inflation also causes people reluctant to save because of the currency goes down.
Indeed, the savings earn interest, but if the interest rate above inflation, the value of money is still declining. When people are reluctant to save money, business and investment to flourish. Because, to grow the business needs of bank funds obtained from private savings.
But in general, inflation can result in reduced investment in a country, pushing the interest rate, encouraging speculative investments, the failure of the implementation of development, economic instability, balance of payments deficit, and declining living standards and welfare of the community.

Determine differences in current cost accounting model and the conventional.
Model Differences Current Cost Accounting And Conventional Model


In general, the conventional accounting, financial statements are presented based on the historical value that assumes that hargaharga (monetary unit) is stable. Conventional accounting does not recognize the changes in general price levels or changes in the level of rates. As a consequence, if there is a change in purchasing power as inflation period, the historical financial statements is economically irrelevant. In this period generally scored higher revenues while fixed assets valued lower. Actually, there are several methods of accounting on the effect of price changes, such as accounting fixed price, current value accounting, and general price level accounting. General price level accounting restatement will hold the components of financial statements into dollars at the same level of purchasing power, but did not change the accounting principles used in accounting based on the value historis.Pada practice, the controversy concerning the relevance of the use of price level accounting public still continues to this day. Some of the arguments that support or reject the application of the general price level accounting will be presented in this article. Similarly, the results of two studies on the effects of application of the general price level accounting on the financial statements will be compared to see whether the accounting adjustments based on the general price level is required.
Historical Cost Financial Statements of Financial Position
1.      Amount in the statement of financial position are not expressed in the units of measurement are now at the end of the reporting period, are restated by applying a general price index.
2.      Items of monetary restated because they are expressed in monetary units is now at the end of the reporting period. Monetary posts are owned and the money to be received or paid in cash.
3.      Assets and liabilities, with the agreement, which is connected with changes in prices such as index linked bonds and loans, adjusted in accordance with the agreement to ensure the balance at the end of the reporting period. The posts are recorded at amounts have been adjusted in the statement of financial position are restated.
4.      All assets and other liabilities are nonmonetary. Some noted the number of non-monetary post is now at the end of the reporting period, such as net realizable value and fair value, then the post is not restated. All assets and liabilities to other non-monetary restated.
5.      Most of the non-monetary items carried at cost or cost less depreciation. Therefore, these items are stated at the amount present on the date of acquisition. Acquisition cost, or cost less depreciation, which are presented back to each item is determined by applying the change in the general price index from the date of acquisition until the end of the reporting period on a historical cost and accumulated depreciation. For example, fixed assets, inventories of raw materials and merchandise, goodwill, patents, trademarks and similar assets are restated from the date of purchase. Supply of intermediate goods and finished goods are restated from the date of the purchase cost and conversion costs.
6.      Detailed record of the date of acquisition of units of fixed assets may not be available or can not be estimated. In rare circumstances, it may be necessary, in the first period to implement this statement, to use an independent professional assessment of the value of such units as the basis for the presentation of the return.
7.      General price index may not be available for a period of time restate fixed assets required by this Statement. Under these circumstances, an entity may need to use the basic estimates, for example, the transfer rate between the functional currency and foreign currencies are relatively stable.
8.      Some noted the number of non-monetary post is now on a date other than the date of acquisition or date of statement of financial position, for example, fixed assets have been revalued in the previous date. In this case, the carrying amount restated from the date of revaluation.
9.      Restated amounts of non-monetary items is reduced, in accordance with relevant GAAP, when the amount exceeds the recoverable amount. For example, the amount of fixed assets, goodwill, patents and trademarks presented again reduced to recoverable amount and restated amount of inventory reduced to net realizable value.
10.  Investee is recorded using the equity method may make a report in the currency hyperinflation economy. Statement of financial position and reports comprehensive income of the investee are restated in accordance with this Statement for the investor counting on net assets and profit and loss. When the financial statements of the investee are restated denominated in foreign currencies, the financial statements are translated at the closing exchange rate.
11.  Effect of inflation is usually recognized in borrowing costs. It is not appropriate to restate the capital expenditure financed by borrowing and to capitalize the borrowing costs to compensate for inflation over the same period. Part of this borrowing costs are recognized as an expense in the period when the cost occurs.
12.  An entity may acquire assets in a deal that allows entities to defer payment without incurring an explicit interest charge. When an entity is not practical to determine the amount of interest, then such assets are restated from the date of payment and not the date of purchase.
13.  At the beginning of the first period of application of this, a component of equity, except retained earnings and revaluation surplus, are restated using general price index from the date of the equity component is contributed or appear. Revaluation surplus that arose in previous periods is eliminated. Balance restated earnings from all other amounts in the statement of financial position
14.  At the end of the first period and subsequent periods, all components of equity are restated by applying a general price index from the beginning of the period or the date of contribution, if more recent. Shift in owners' equity during the period disclosed in accordance with IAS 1 (revised 2009):Presentation of Financial Statements. Comprehensive Income Statement
15.  This statement requires that all items in comprehensive income statement are expressed in units of measurement are now at the end of the reporting period. Therefore, the entire amount necessary to implement the changes and display it in the general price index from the date income and expenses were initially recorded in the financial statements.Gain or Loss on Net Monetary Position
16.  In an inflationary period, if the entity has a monetary assets exceed monetary liabilities, the entity's purchasing power decreases, and if the entity has a monetary liabilities exceed monetary assets, then the purchasing power is increasing all the entities connected to a price level. Monetary position gain or loss is the difference in net non-monetary assets, and equity items in the comprehensive income statement are restated and the adjustment of index linked assets and liabilities. Gains or losses can be estimated using changes in the general price index to the weighted average over the period of the difference between monetary assets and monetary liabilities.
17.  Gains or losses net monetary position is included in the income statement. Adjustments to assets and liabilities linked to price changes in the agreement) in accordance with paragraph 13, with the offsetting gain or loss on net monetary position. Income and other expenses, such as income and interest expense and foreign exchange differences related to investments or loans, are also associated with the net monetary position. Although the post is separately disclosed, it can be helpful if the post is presented along with the gain or loss on net monetary position in the comprehensive income statement.
Now the Cost of Financial Statements Statements of Financial Position
18.  Items that are presented at current cost are not restated because they are expressed in units of measurement are now at the end of the reporting period. Elsewhere in the restated statement of financial position in accordance with paragraphs 11 to 24.
Comprehensive Income Statement
19.  Comprehensive income statement using the current cost, before restatement, generally reports costs are now at the time of the underlying transactions or events. Therefore, the entire amount is to be presented again in the unit of measurement is now at the end of the reporting period by using a general price index.Gains or losses Net Monetary Position
20.  Gains or losses are recorded net monetary position in accordance with paragraphs 26 and 27. Statement of Cash Flows
21.  This statement requires that all items in the cash flow statement are expressed in units of measurement are now at the end of the reporting period.Related Figures
22.  Corresponding number in the previous reporting period, whether based on a historical cost approach or a current cost approach, are restated using general price index, so the comparative financial statements are presented in units of measurement are now at the end of the reporting period. Information disclosed in connection with previous periods is also expressed in units of measurement are now at the end of the reporting period. For the purpose of presenting comparative amounts in the presentation of foreign currency, applied IAS 10 (revised 2010): Effects of Changes in Foreign Exchange Rates paragraph 42 (b) and 43.Consolidated Financial Statements
23.  The parent entity financial reports in the currency hyperinflation economy may have subsidiaries that also make a report in the currency hyperinflation economy. Entity's financial statements are restated the child's needs by using the general price index of the country whose currency is reported prior to inclusion in the consolidated financial statements issued by the parent entity. When a foreign subsidiary is an entity, then the restated financial statements are translated at the closing exchange rate. Entity's financial statements were reported in children who are not hyper-inflation economy currencies are treated according to Foreign Exchange.
24.  If financial statements with a different end of the reporting period are consolidated, all monetary and nonmonetary post need to be restated in the unit of measurement is now on the consolidated financial statements.





Explain the differences of inflation accounting in the U.S., Britain, and Brazil.
Inflation accounting differences in American, English, and brazil

Differences in inflation accounting in the United States, Britain, Brazil :
1.      Country United States
In 1979, the FASB issued Statement of Financial Accounting Standards / SFAS No.33, entitled "Financial Reporting and Changing Values" statement requires U.S. companies that have supply and aktifa still worth more than $ 125 million or assets of more than $ 1 billion, for the past 5 years trying to make disclosure of constant purchasing power as the basic framework of the historical cost basis of measurement for the primary financial statements.
Many users and compilers of financial information in accordance with SFAS No.33 found that:
·         Double that required disclosure of FASB confusing.
·         Double the cost of preparation of disclosure is too large.
·         Disclosure of purchasing power historical cost is not too useful when compared to the current cost. Finally issued SFAS N0.88 to help companies that reported the effect of statements on the price change and become the starting point of future inflation accounting standards.
Reporting company is encouraged to disclose the following information for each of the last 5 years:
a.  Net sales and other operating income.
b. Profit from opersi running on current cost basis.
c. Increases or decreases in current cost or recoverable amount.
d. Each agregrat foreign currency translation adjustments based on current cost, arising from the consolidation process.
e. Net assets at year end decreased current cost basis.
f. Earnings per share on the basis of current cost
g. Dividend per common share
h. Year-end market price of common stock perlembar
i. Level of consumer price index used to measure the return of opersi running.
SFAS No.88 disclosure guidelines also include overseas operations included in the consolidated statements of U.S. companies holding company which, engadopsi dollar as the functional currency for its foreign operations measure looked at the operations from the perspective of the parent company's currency.
As a result the accounts of the operation should be translated into dollars, adjusted for U.S. inflation. Multinational companies are adopting local currency as the functional currency for most of its foreign operations in light of the local currency.
FASB is allowing companies to use the present re-translation method or adjust to the foreign inflation and then do a translation into U.S. dollars. Thus, the adjustment of the data to reflect the current cost inflation index can be based on the general price level of the U.S. or abroad.
2.      The UK
UK Accounting Standards Committee / ACS issued a "Statement of Standard Accounting Practice 16 / SSAP," Accounting for Costs Now "for a trial period of 3 years in March 1980. Although SSAP 16 was canceled in 1988, the methodology is recommended for companies that voluntarily report accounts-their account adjusted for inflation.
Differences SSAP 16 with SFAS 33 is
1. If the U.S. standard requires constant cost accounting and now, SSAP 16 only adopt the current cost for external reporting.
2. If the adjustment of U.S. inflation based on the income statement, expense report in the UK now mengwajibkan both income statements and balance sheets are now charged, along with explanatory notes.
3 British Standards allow reporting options:
o   Presenting the accounts as a current cost basis financial statements with supplementary accounts of historical cost.
o   Presenting the accounts of historical cost as the basis of financial statements with supplementary accounts of current cost.
o   Presents the current cost accounts as the accounts satuny dilengkanpi with enough historical cost information.
With treatment of gains and losses relating to monetary items, FAS 33 menharuskan separate disclosure for each digit. SSAP 16 mengaharuskan two numbers that both reflect the influence of specific price changes, ie
o   Monetary working capital adjustment (Monetary Working Capital Adjustment) / MWCA
Acknowledging the influence of price changes specific to the total amount of working capital used by the company in its operations.
o   The adjustment mechanism
Allows the effect of price changes specific to non-monetary assets of the company.

3.      Brazilian state
Although no longer required the recommended inflation accounting in Brazil today reflects two groups of reporting options, the Brazilian Corporate Law and Capital Market Supervisory Commission of Brazil. Inflation adjustment in accordance with the law firm presenting the accounts re-permanent assets and shareholders' equity by using a price index which is recognized by the federal government to measure the local currency devaluation.
Inflation adjustment to permanent assets and shareholders' equity are presented net of the amount over that disclosed separately in the profit gain or loss is now as monetary correction.
Price-level adjustments to equity shareholders are shareholders in the amount of investment which should grow to awalperiode not tertingla with inflation. Adjustments to assets permanently smaller than equity adjustments cause loss of purchasing power that reflects the risk faced by the company on the net monetary assets.
Understanding of financial reporting in hyperinflation economy.
Financial Reporting In Economic
Hyperinflation Statement of Financial Accounting Standard 63: Financial Reporting in Hyperinflation Economic consists of paragraphs 1-40. The entire paragraph has the power to set the same. Paragraphs which are printed in bold and italics to set the main principles. IAS 63 should be read in the context of goal setting and the Framework of the Preparation and Presentation of Financial Statements. IAS 25 (revised 2009) Accounting Policies, Changes in Accounting Estimates and Errors provides a basis to select and apply accounting policies when no explicit guidance. This statement is not intended to apply to elements that are not material
1.      This statement is applicable to the financial statements, including the consolidated financial statements of each entity that functional currency is the currency of an economy experiencing hyperinflation (hereinafter referred to as hyper-inflation economies).
2.      Hyperinflation in the economy, reporting of operating results and financial position in the local currency without restatement is not useful. Money loses purchasing power such that the ratio of the amounts of transactions and other events from time to time, even within the same accounting period, be misleading.
3.      This statement does not set at a certain level of inflation is considered hyperinflation. Consideration is required in determining when restatement of financial statements need to be done in accordance with this statement. Characteristics of the economic environment of a country which is an indication that the country is experiencing hyperinflation, among others: (a) inhabitants prefer to store their wealth in the form of non-monetary assets or in a foreign currency is relatively stable. Amount of local currency held immediately invested to maintain purchasing power; (b) the population consider the monetary amount is not in the local currency but in foreign currencies are relatively stable. The prices may dikuotasikan in foreign currency; (c) the prevailing price in the sales and purchases on credit is determined by inserting a factor expected loss of purchasing power during the credit period, even if the short loan period, (d) interest rates, wages and prices associated with the price index, and (e) the cumulative inflation rate over three years approaches or exceeds 100%.
4.       All entities that prepare financial statements in the currency of the same hyper-inflation economies are encouraged to apply this statement from the same date. However, this statement is applied to the financial statements of each entity since the beginning of the reporting period when the entity identifies the existence of hyperinflation in the country whose currency is used by such entities to prepare financial statements.
5.      Price change from time to time as a result of political influence, economic, social and general or specific. Specific influences such as changes in supply and demand and technological changes may cause individual prices increase or decrease significantly and independently from one another. In addition, the general effects can cause changes in general price levels and purchasing power of money.
6.      Entities that prepare financial statements on the basis of historical cost accounting do so without considering changes in general price level or a specific price increase of a recognized asset or liability. An exception to this principle is applied to the assets and liabilities as required, or elected, to be measured at fair value. For example, fixed assets are revalued at fair value. However, some entities present the financial statements based on current cost approach that reflects the impact of changes in specific prices of assets.
7.      Hyperinflation in the economy, financial statements, either prepared on the historical cost approach and cost approach now, it will only work if it is expressed in units of measurement that applies at the end of the reporting period. Therefore, this statement is applied to entities that provide financial statements denominated in hyperinflation economy. Entities are not allowed to present separate financial statements are not restated, although attaching the information required by this Statement.
8.      Entity's financial statements that functional currency is the currency hyperinflation economy, based on historical cost approach or a current cost approach, are presented in units of measurement that applies at the end of the reporting period. Corresponding figures for the previous period required by IAS 1 (revised 2009) Presentation of Financial Statements and any information in the previous period are also presented in the unit of measurement is now at the end of the reporting period. For the purpose of presenting comparative amounts in a different presentation currency, applied IAS 10 (revised 2010): Effects of Changes
Knowing whether a constant dollar or current cost is better to measure the effects of inflation.
International Perspective Against International Accounting
Some countries have tried the method of inflation accounting is different. Also reflects the actual practice of pragmatic considerations such as the severity of the national inflation rate and the view that the parties who are directly affected by inflation accounting figures. Observe several different methods of inflation accounting is very useful when assessing the current condition of  the most advanced.
United States
In 1979, the FASB issued Statement of Financial Accounting Standards (Statement of Financial Accounting Standards, SFAS) No.33 entitled "Financial Reporting and Changing Prices", this statement requires U.S. companies that have inventory and fixed assets (before deducting depreciation) worth more than $ 125 million or total assets of $ 1 billion lebh (net of accumulated depreciation) for the past 5 years emncoba do disclosures of constant purchasing power historical cost and current cost of constant purchasing power. Many users and compilers of financial information in accordance SFAS 33 specifies that:
·         Double disclosures required by FASB confusing.
·         The cost for the preparation of double disclosure is too large.
·         Disclosure of constant purchasing power historical cost is not very useful when the data than the current cost.
FASB issued guidance to assist companies that report the effect of a statement of the price change and the starting point for inflation accounting standards in the future. Reporting company is encouraged to disclose the following information for each of the last 5 years:
§  Net sales and other operating income.
§  Profit from continuing operations based on current cost basis.
§  Purchasing power gain or loss (monetary) on net monetary items.
§  An increase or decrease in the cost or the amount that can now dpulhkan (ie the net cash amount that is expected to be dipulhkan through the use or sale) is lower than the inventory or fixed assets, net of inflation (the general price level changes).
§  Each aggregate foreign currency translation adjustments, based on current cost, arising from the consolidation process
§   Aktiva clean at the end of the year according to the current cost basis
§   Earnings per share (from current operations) on the basis of current cost
§   Dividends per common share.
§  Year-end market price per share of common stock.
§  Rate of Consumer Price Index (Consumer Price Index-CPI) used to measure income from current operations
To enhance the comparability of data, the information presented Dapa:
§  Equivalent purchasing power of the average (or late)
§  Dollar base period (1967) are used in calculating the CPI.


English
Akuntans British Standards Committee (Accounting Standard Committee-ASC) issued Statement of Standard Accounting Practice 16 (Statement of Standard Accounting Practice SSAP-16) "Cost Accounting Today" for a trial period of 3 years in March 1980. SSAP 16 differ with SFAS 33, namely:
Ø  If the U.S. standard requires constant dollar accounting and current cost, SSAP 16 adopt only the current cost method for external reporting.
Ø  If the adjustment of U.S. inflation based on the income statement, expense report in the  UK now require both an income statement and balance sheet are now charged, along with explanatory notes.
Standards in the UK to allow the three reporting options, namely:
Ø  Presenting the accounts as a current cost basis financial statements with supplementary accounts of historical cost.
Ø  Presenting the accounts of historical cost as the basis of financial statements with supplementary accounts of current cost.
Ø  Menyajkan current cost accounts as the only account that is equipped with an adequate historical cost information.
SSAP requires two numbers reflect the effect of specific price changes, namely:
Ø  Monetary working capital adjustment recognizes the influence of price changes specific to the total amount of working capital used by the company in its operations.
Ø  Adjustment mechanism allows the effect of price changes in the specifics of non-  monetary asstes of the company.
Brazil
Inflation adjustment in accordance with the law firm presenting the accounts re-permanent assets and shareholders ekutas using the price index which is recognized by the federal government to measure the local currency devaluation. Permanent assets include fixed assets, buildings, investments, deferred expenses and related depreciation, and amortization accounts or depletion (including any fees related losses). The accounts of the shareholders' equity consists of capital, revenue reserves, reserve evaluation and capital reserve accounts used to record adjustments to the price level of capital.
Inflation adjustment to permanent assets and shareholders' equity are presented net of the amount over that disclosed separately in the profit gain or loss is now as monetary correction.

Commission of the Brazilian Capital Section requires another method of accounting for the companies whose shares are publicly traded. Companies listed their shares should resize all transactions that occur within a period by using the functional currency.
Definition of a double dip (double dip) and describes how handling.
Prevention Of “ Double - Dip “
At the time of her restate estimates beyond horrified to take into account foreign inflation, caution must be maintained to prevent the phenomenon of "double-dip". This problem arises from the fact that the local inflation impact directly on the exchange rate used in the translation process. Although economists generally assume an inverse relationship between a country's internal inflation rate with the external value of its currency, the evidence shows that such relationships are rare, at least in the short term. Therefore the magnitude of adjustments made to eliminate the phenomenon of double counting will vary depending on the level of negative correlation between the difference in inflation rates.
Inflation adjustment to the cost of goods sold and depreciation expense are designed to suppress earnings "as reported" in order not terjadioverstate ment laba.meskipun so, due to the negative relationship between local inflation and currency values, changes in exchange rates between the financial statements of the other sequence, which in general attributable to inflation (at least for a certain period), will lead the company at least partly reflect the impact of inflation (ie the currency translation adjustment), the profits "as dilaporkanya". So to avoid double counting inflation, loss of translation that has been reflected in earnings "as reported" a company should be counted as part of the inflation adjusment.
Over the relevant adjustment for multinational companies based in the U.S. for adopting the dollar as the functional currency of foreign operations berdasarkanFA translate SB 52 and the stock at the exchange rate goes. As for companies based in the European tendency toward the use of foreign exchange translation method runs. So that without it could result in an adjustment of profit is too low or too high profits due to inflation abroad be counted twice.
At present over foreign accounts for inflation in foreign countries, one must be careful to avoid what is called a double fall. This problem arises because the direct effect on the local inflation rate used in translation.
Inflation adjustment to the cost of goods sold or are intended to reduce depreciation expense basarnya earnings "as reported" to avoid further assessment of net income. However, due to the influence of an inverse relationship between local inflation and currency values, changes in foreign exchange rates in the financial statements of the sequence, which is generally caused by inflation, causing some of the effects of inflation on the operating results of companies "as reported". To avoid the influence of the adjustment process inflsi twice the inflation adjustment must take into account the loss of translation that has been reflected in the results "as reported" from a company