Which method is best

Which method is best

Which method is best

Which method is best
Which method is best

Proponents of historical cost model constantly argued that the cost model is now considered the cost of the historical cost karane not based on acquisition cost initially and the model is based on the estimated cost of the hypothesis and therefore too difficult sebyektif and implemented in practice. Ignoring changes in general purchasing power of the money market, causing inter-period comparisons difficult to interpret and did not consider keunatungan and losses from holdings of monetary items such as debt.
Model of constant purchasing power of current cost buy cost model combines the characteristics of historical cost in cash and current cost models. The basic framework of the mixture increases recognize the present value of assets as a gain of wealth, and thus allow for comparisons between income earnings now prior periods. Diangggap company would be better only if the asset increases greater than inflation.

International point of view of inflation accounting
Some countries tried the method of accounting for inflation accounting is different. Also reflects the actual practice of pragmatic considerations such as the severity of national inflation and the outlook 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.
International accounting standards bodies
1. IASB concluded that reporting kuangan position and operating performance in the local currency becomes meaningless in an environment that experienced hyperinflation
2. IAS 29: “kuangan reporting in hyper inflationary perikonomian require the presentation of key financial statement information.
3. Repeated presentation of constant purchasing power in tangggal balance sheet, usually with a coat or a historical model of Curent cost.
4. advantages and disadvantages of purchasing power fed into the current earnings

Issues of inflation
1. Is the current dollar cost kontans or fatherly better measure the effects of inflation
2. Accounting treatment of gains and losses of inflation
3. Foreign accounting
4. Avoid the phenomenon of “double surprise”

Advantages and disadvantages of inflation
Treatment of gains and losses of monetary items is different in each respective country
1. United States
Re presenting in constant dollars, the balance of the final l awa, and transactions in, all assets and liabilities (including long-term debt gains and losses are disclosed in a separate post.
2. English
Separated into monetary working capital adjustment mechanism and the second figure is determined by changes in rates. There the term “current cost of teratribusi earnings to shareholders”.
3. Brazil
Not adjust assets and liabilities are aksplisit now because this amount is expressed in realizable value.

Accounting for inflation goal
The purpose of inflation accounting is fatherly mengekur performance of a company and allows anyone who is interested fatherly measure the amount, timing and likelihood of future cash flows.

Accounting for inflation abroad
FASB 89 memeperhitungkan encourage companies to decrease prices, but actually still leave the problem, namely:
1. The company maintains non-monetary value based on historical cost or current cost equivalent?
2. Companies that choose to provide additional cost data are now on overseas operations by two methods:
a. Restate-translate
b. Transkate-restate

Investors need financial statements that are tailored to the specific price tinggkat, rather than the general price level. The reason is: the specific price level adjustment determines the maximum amount payable by the company as a dividend without reducing its productive capacity.
Problem Vs restate-translate-restate translate not a matter that if the cost to use your history. So the price level adjustment procedure is recommended:
1. Serve over fatherly financial statements reflect the changes in specific prices
2. translasikan accounts using a constant value (exchange rate in the base year or current)
3. Use the index value of the specific price books that are relevant to calculate the monetary gains and losses

Sumber : https://www.selfgrowth.com/articles/the-traditional-and-contemporary-geography-paradigm-and-its-explanations