Inflation and the current cost confusion

Article Abstract:

Scotland's accounting profession has refused to adopt current cost accounting as the acceptable method for valuing assets during inflationary times, despite governmental pressures, such as the Scottish Treasury's Byatt Report endorsing current cost accounting. Reasons for the failure to adopt current cost accounting are discussed. The primary reason for this refusal is that rising prices in Scotland are not uniform; some industries seem to experience more inflation than others. Other reasons include: the statement issued by the Accounting Standards Steering Committee suggesting that current cost accounting figures be based on the General Index of Retail Prices and be presented in addition to historical cost data; the 364-page "Inflation Accounting" report issued by the Committee of Enquiry, which served to confuse, rather than clarify, related issues; the inadequacy of the Retail Price Index to depict inflation accurately; the difficulty of maintaining comparability standards from year to year when asset values are restated each year; and the impracticality of reporting valuation differences in the case of borrowed funds as profit. Alternatives to the proposed current cost accounting standards being proposed are suggested and explained by example.

Accounting and auditing, Scotland, Inflation (Finance), Valuation, Assets (Accounting), Inflation (Economics)

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Accounting for software development costs

Article Abstract:

A new American accounting standard covering the treatment of software development costs is examined. The ASC should examine the SORP or the SSAP to provide guidance to accountants. Statement No. 86 maintains that costs absorbed from software development should be taken as an expense unless the development stage is close to its final stages.

Planning, Software, Finance

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