CONSTANT PESO ACCOUNTING

As a general rule, only nonmonetary items are restated. However, when

comparative financial statements are prepared, both monetary and nonmonetary
items are restated.
Any revaluation surplus previously recognized is eliminated.
If an item is sold, the numerator is the index number on the date of sale.
The following nonmonetary itemsSPIDI (speedy)are restated by using
their average index numbers:

Sales
Purchases
Inventory (except when at NRV)
Distribution and admin expenses
Income tax

Monetary assets, beginning, restated

Less: Monetary liabilities, beginning, restated
Net monetary assets, beginning, restated
Add: Increase in monetary assets in the current year, restated
Sales
Other items causing an inflow of cash
Total
Less: Decrease in monetary assets in the current year, restated
Purchases
Distribution and admin expenses
Interest expense
Income tax
Dividends
Other items causing an outflow of cash
Net monetary assets, ending, restated
Net monetary assets, ending, historical cost
Less: Net monetary assets, ending, restated
Gain/Loss on Purchasing Power
 CURRENT COST ACCOUNTING
Just memorize the following items, Ralph. These itemsDCIPR (decipher)
are restated by using either their average current cost or current cost.

Depreciation average current cost

COGS average current cost
Inventory current cost
PPE current cost
Retained earnings current cost

o Unrealized/Realized holding gain/loss = Current cost versus historical cost (on

a cumulative basis)
o Accumulated depreciation is based on the ending current cost, not on the
average current cost.
o For equipment and inventory, their current cost is measured at lower of
current cost and recoverable amount.