Introduction to Price-Level Accounting Features of Price-Level Accounting Methods of Price-level Accounting challenges of Price-level Accounting

method of measuring the impact of changes in general purchasing power of the dollar. Inflation is measured and reported in the financial statements. Balance sheet and income statement accounts are restated to average current year dollars using the Consumer Price Index. Purchasing power gains and losses on monetary item are reflected in the price-level income statement. It is also known as inflation accounting.

ALSO KNOWN AS INFLATION ACCOUNTING MEASURES THE IMPACT OF CHANGES IN GENERAL PURCHASING POWER OF THE DOLLAR PRICE LEVEL INCOME STATEMENT ELUCIDATES PURCHASING POWER GAINS AND LOOSES IT DESCRIBES A RANGE OF ACCOUNTING SYSTEM DESIGNED TO CORRECT PROBLEMS ARISING FROM INFLATION

General indexes Price Index of Gross Domestic Product Cost-of-living Index Consumer Price Index Wholesale Price Index Production Price Index Special indexes Industry indexes Commodity group indexes
Commodity indexes

 CPP - Current Purchasing Power CCA - Current Cost Accounting The Finnish AHI-Method (Aktivoitujen) Hankintamenojen Indeksointisovellutus)

Retains historic cost accounting conventions In U.S. General Purchasing Power (GPP) Expresses accounts in terms of purchasing units Maintains the general purchasing power of the invested capital The original purchasing costs are corrected by correction coefficients Applying some general index, for example Retail Price Index

Monetary items - financial assets and liabilities remain unchanged Inventories: FIFO purchase cost is corrected by a suitable correction coefficient to correspond the purchase power of the end of accounting period

Fixed assets:

The purchase cost is corrected to correspond the purchase power of the end of the accounting period The balance value of the fixed assets is the same percentage of the corrected purchase cost as the book value is of the original purchase cost

Maintaining the production level of the company Main focus on replacement of production capacity Money is retained as the unit of measurement Different special indexes are applied to different items Work intensive

 A combination of the CPP and CCAmethods Specially developed for firm analysis Calculations simple Little extra information needed Change in the general price level is described by the wholesale price index Adjustments are made on a yearly basis the price level at the middle of the accounting period as the base

CASE STUDY OF MEASURING AND ASSESSING FOREST DEGRADATION

THIS CASE STUDY OUTLINES RESULTS OF FOREST RESOURCES DEGRADATION ACCOUNTING COVERING A PERIOD OF 30 YEARS ( 1976- 2006) OF DYNAMIC OF CHANGE OF FOREST RESOURCES IN THE COUNTRY

THIS CASE STUDY AIMS TO COLLECT INFORMATION AND REVIEW FOREST DEGRADATION ACCOUNTING