Accounting for the effects of changing prices

Article Abstract:

Although historical cost accounting methods are widely accepted in Great Britain, in times of rising costs and changing price structures, current cost accounting methods more accurately portray a company's results of operations and changes in financial position. A guideline indicating when and how to use current cost accounting methods is provided. The Accounting Standards Committee (ASC) of the Institute of Chartered Accountants recommends that current cost accounting be used to determine a company's current-year results of operations, based upon operating or financial capital accounting concepts, and using the pound sterling as the nominal unit of measure. Other ASC recommendations in this general area are also discussed, including: the creation of a "revised earnings statement" as part of the annual report package, disclosures to be included in the notes to current cost accounting financial statements, data that should be contained on the current cost accounting balance sheet, and indication of the capital maintenance concept used in preparing the financial statements.

Methods, Accounting and auditing, Scotland, Prices, Cost accounting, Current value accounting

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Accounting for pensions costs: transitional provisions

Article Abstract:

Selecting which transitional provision to follow when first applying the Statement of Standard Accounting Practice 24 (SSAP 24) may not be clear for some businesses. SSAP 24 provides for a way to determine pension costs by examining both past and future conditions. A pension fund position at a particular date, however, takes into account an unusual combination of features, which reveals the need for flexible, comprehensive, transitional provisions. An example is described to explain the application of SSAP 24 and the use of a transitional provision with the application.

Finance, Pensions

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