Glossary of Inflation Accounting Terms

1. attribute. The quantifiable characteristic of an item that is certainly measured for accounting purposes.By way of example, historical expense and replacement price are attributes of an asset.
2. current-cost adjustments. Adjusting asset values for changes in precise prices.
3. disposable wealth. The level of a firm’s net assets that may be withdrawn without having lowering its starting degree of net assets.
4. gearing adjustment. The benefit to shareholders’ getting power obtain from debt financing and signals that the firm have to have not recognize the extra replacement price of operating assets for the extent they are financed by debt. The U.S. expression for gearing is leverage.
5. general purchasing power equivalents. Currency amounts that have been adjusted for adjustments inside the general level of prices.
6. common getting gains and losses. See monetary gains and losses.
7. historical cost-constant currency. See common purchasing power equivalents.
8. holding obtain. Improve within the existing price of a nonmonetary asset.
9. hyperinflation. An excessive rate of inflation, as when the common degree of rates in an economy increases by extra than 25 percent per annum.
10. inflation. Increase within the general degree of rates of all goods and services in an economy.
11. monetary asset. A claim to a fixed quantity of currency inside the future, like cash or accounts receivable.
12. monetary gains. Increases in general purchasing power that take place when monetary liabilities are held in the course of a period of inflation.
13. monetary liability. An obligation to pay a fixed quantity of currency in the future, just like an account payable or debt that bears a fixed rate of interest.
14. monetary losses. Decreases generally buying power that take place when monetary assets are held through a period of inflation.
15. monetary operating capital adjustment. The impact of distinct cost changes on the total quantity of operating capital employed by the business enterprise in its operation.
16. nominal amounts. Currency amounts that have not been adjusted for altering rates.
17. nonmonetary asset. An asset that does not represent a fixed claim to cash, including inventory orplant and equipment.
18. nonmonetary liability. A debt that doesn't require the payment of a fixed sum of money in thefuture, for instance a customer advance. Right here the obligation is always to present the consumer a very good or service whose value may alter because of inflation.
19. parity adjustment. An adjustment that reflects the distinction in inflation in between the parent and host countries.
20. permanent assets. A Brazilian term for fixed assets, buildings, investments, deferred charges and their respective depreciation, and depletion or amortization amounts.
21. cost index. A cost ratio where the numerator could be the price of a representative “basket” of goods and services in the present year along with the denominator is the cost of the identical basket of goods and services in a benchmark year.
22. purchasing power. The general capability of a monetary unit to command goods and services.
23. real profit. Net income that has been adjusted for altering rates.
24. replacement expense. The present cost of replacing the service prospective of an asset in the regular course of business enterprise.
25. reporting currency. The currency in which an entity prepares its economic statements.
26. restate-translate technique. Utilized when a parent business consolidates the accounts of a foreign subsidiary located in an inflationary environment. With this method, the subsidiary’s accounts are very first restated for nearby inflation and then translated for the parent currency. distinct price transform. The change within the value of a distinct commodity, for example inventory or
    equipment.
27. translate-restate method. A consolidation technique that 1st translates a foreign subsidiary’s accounts to parent currency and then restates the translated amounts for parent-country inflation.