国际会计学第六版chapter7.pptVIP

International Accounting, 6/e;Learning Objectives;Do adjustments for changing prices vary internationally? What does IAS 21 have to say about inflation adjustments in hyperinflationary countries? What is the restate-translate controversy all about? Is it possible to double-count for the effects of foreign inflation? ;What Does “Changing Prices” Mean and How are Price Changes Measured?;General price level changes are measured by use of a general price level index (GPL). GPL is a cost ratio that compares the cost of a basket of goods in the current period with the cost of that same basket in a prior or base period. The reciprocal of the GPL is a measure of the general purchasing power of the monetary unit. ;Specific price change: refers to the movement in the price of a specific asset; e.g., a change in the price of inventory, plant, or equipment. Specific price changes are measured by a specific price index (SPL). SPL is a cost ratio that compares the cost of a specific item with its cost in a prior or base period.;Why are Financial Statement Potentially Misleading During Periods of Changing Prices?;Deducting expenses based on historical purchasing power from revenues that expressed in currency of current purchasing power yields a nonsensical index of performance. ;Why are Financial Statements Potentially Misleading During Periods of Changing Prices? (contin);From a managerial perspective, accounting numbers unadjusted for changing prices distort: Financial projections Budget comparisons Performance data ;Types of Adjustments for Changing Prices;Revenues would be $1,500 received uniformly over the period, expenses would be $1,000, and net income would be $500. Net income of $500 represents the amount that could be withdrawn from the firm and leave the owners with their original investment intact. ;General Price Level Adjustments ;To keep up with inflation, owners’ equity should grow by at least $210; i.e., beginning equity = $1,000 x 121/100 = ending owners’ equi