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THE CONCEPTUAL FRAMEWORK
Capital Maintenance
Alternatives to historical cost accounting
• There are two main forms of current value accounting which seek to
tackle the disadvantages of historical cost accounting.
• Constant Purchasing Power (CPP)
• Figures in the financial statements are adjusted to reflect amounts with
the same purchasing power, using a general price index.
• In this way the financial statements reflect the impact of inflation,
although it is only a general inflationary impact.
• Current Cost Accounting (CCA)
• All costs in the statement of profit or loss are adjusted to show the value
of assets consumed during the period, based on current rather than
historical values.
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