A.
Understand why the financial report has the potential
to mislead during the period of price changes.
During periods of inflation, asset values are carried at acquisition cost less initially reflect its current value (the higher). This distorts the measurement inaccuracies
(1) financial projections based on historical time series of data
(2) the budget is the basis of performance measurement and
(3) performance data can not isolate the effect of inflation that can not be controlled. Earnings are valued more in turn will lead to:
a. The increase in the proportion of tax
b. Demand more dividends than shareholders
c. Salaries and demand higher wages than the workers.
d. Adverse action of the host country (such as the taxation of a huge advantage).
Failure to adjust the company's financial data to changes in the monetary unit's purchasing power also creates difficulties for the reader to interpret financial statements and compare the operating performance of companies that reported. In periods of inflation, revenues are generally denominated in the general purchasing power is lower (ie the purchasing power of the present period), which is then applied against the related expenses. Conventional accounting procedures also ignore the purchasing power gains and losses arising from the ownership of cash (equivalent) during the period of inflation.
Therefore, to explicitly recognize the effect of inflation is useful to do because:
1. The effect of price changes in part depend on the transaction and the circumstances facing the company.
2. Manage the problems caused by price changes depend on an accurate understanding of the problem.
3. Reports from managers about the problems caused by price changes much easier to believe when businesses publish financial information that addresses these problems.
source: http://eka1989.wordpress.com/
B. Knowing inflation accounting terms and understand the influence of price adjustments on the financial statements.
C. Determine differences in current cost accounting model and the conventional.
Differences in the cost accounting model and the conventional current Historical Cost Financial Statements 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. nonmonetary. Some noted the number of non-monetary post is now at the end of the repo
4. All assets and other liabilities are
rting 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.
source: http://eka1989.wordpress.com/
D. Explain the differences of inflation accounting in the U.S., Britain, 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: a. Double that required disclosure of FASB confusing. b. Double the cost of preparation of disclosure is too large. c. 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 a. If the U.S. standard requires constant cost accounting and now, SSAP 16 only adopt the current cost for external reporting. b. 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. c British Standards allow reporting options:
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.
SOURCE Choi D.S. Frederick & Meek K. Gary. , 2005. INTERNATIONAL ACCOUNTING, BOOK 1 ISSUE 5. New York: Four Salemba. http://khair2120.wordpress.com/category/akuntansi-internasional/
E. Understanding of financial reporting in hyperinflation economy.
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 01. 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).
02. 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.
03. 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%.
04. 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.
05. 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.
06. 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.
07. 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.
08. 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
Sources: Implementation Approach Makes Return in PSAKAK 63: Financial Reporting in Hyperinflation Economy
F. Knowing whether a constant dollar or current cost is better to measure the effects of inflation.
G. Definition of a double dip (double dip) and describes how handling.
During periods of inflation, asset values are carried at acquisition cost less initially reflect its current value (the higher). This distorts the measurement inaccuracies
(1) financial projections based on historical time series of data
(2) the budget is the basis of performance measurement and
(3) performance data can not isolate the effect of inflation that can not be controlled. Earnings are valued more in turn will lead to:
a. The increase in the proportion of tax
b. Demand more dividends than shareholders
c. Salaries and demand higher wages than the workers.
d. Adverse action of the host country (such as the taxation of a huge advantage).
Failure to adjust the company's financial data to changes in the monetary unit's purchasing power also creates difficulties for the reader to interpret financial statements and compare the operating performance of companies that reported. In periods of inflation, revenues are generally denominated in the general purchasing power is lower (ie the purchasing power of the present period), which is then applied against the related expenses. Conventional accounting procedures also ignore the purchasing power gains and losses arising from the ownership of cash (equivalent) during the period of inflation.
Therefore, to explicitly recognize the effect of inflation is useful to do because:
1. The effect of price changes in part depend on the transaction and the circumstances facing the company.
2. Manage the problems caused by price changes depend on an accurate understanding of the problem.
3. Reports from managers about the problems caused by price changes much easier to believe when businesses publish financial information that addresses these problems.
source: http://eka1989.wordpress.com/
B. Knowing inflation accounting terms and understand the influence of price adjustments on the financial statements.
C. Determine differences in current cost accounting model and the conventional.
Differences in the cost accounting model and the conventional current Historical Cost Financial Statements 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. nonmonetary. Some noted the number of non-monetary post is now at the end of the repo
4. All assets and other liabilities are
rting 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.
source: http://eka1989.wordpress.com/
D. Explain the differences of inflation accounting in the U.S., Britain, 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: a. Double that required disclosure of FASB confusing. b. Double the cost of preparation of disclosure is too large. c. 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 a. If the U.S. standard requires constant cost accounting and now, SSAP 16 only adopt the current cost for external reporting. b. 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. c British Standards allow reporting options:
- Presenting the accounts as a current cost basis financial statements with supplementary accounts of historical cost.
- Presenting the accounts of historical cost as the basis of financial statements with supplementary accounts of current cost.
- Presents the current cost accounts as the accounts satuny dilengkanpi with enough historical cost information.
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.
SOURCE Choi D.S. Frederick & Meek K. Gary. , 2005. INTERNATIONAL ACCOUNTING, BOOK 1 ISSUE 5. New York: Four Salemba. http://khair2120.wordpress.com/category/akuntansi-internasional/
E. Understanding of financial reporting in hyperinflation economy.
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 01. 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).
02. 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.
03. 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%.
04. 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.
05. 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.
06. 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.
07. 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.
08. 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
Sources: Implementation Approach Makes Return in PSAKAK 63: Financial Reporting in Hyperinflation Economy
F. Knowing whether a constant dollar or current cost is better to measure the effects of inflation.
G. Definition of a double dip (double dip) and describes how handling.
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