How ICI halved the value of its shareholders' funds

Article Abstract:

Profits, assets and business trends over time are all influenced by inflation. Hence, companies that fail to make inflation adjustments in their accounts also fail to recognize the difference between profit and loss. This point is clearly demonstrated in the case of ICI PLC. The UK firm's annual reports using historical cost (HC) accounting, a method measuring profit or loss in terms of money, show profits. However, ICI would report losses it it used the constant purchasing power accounting (CPP) method which measures profit and loss in terms of the ability to maintain purchasing power capital. ICI's average rates of return for the period 1971-1991 in HC was 15%, but only 1.5% in CPP. It is estimated that ICI's real dividend per share in 1992 is even less than what it was more than 30 years ago. Like ICI, HC and CPP figures for the UK firm GEC are also vastly different.

Relays and industrial controls, Accounting and auditing, Imperial Chemical Industries PLC, Inflation accounting, GEC Automation Projects Inc.

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Consistently inconsistent on accounting for value

Article Abstract:

There has been a long-running debate over the merits of current costs versus historical costs in accounting for changing prices. Despite its denial that it is reviving current cost accounting, the Accounting Standards Board (ASB) continues to emphasize the superiority of this accounting approach over historical cost-based reporting. However, it is argued that the current-cost approach is problematic because it gives rise to unrecognized assets and liabilities, such as derivatives and intangibles. Moreover, realizable values or replacement costs do not account for synergy and management. While the ASB's factions and plans are not contrary to the progressive growth of an accounting regime that generates information for contractual and retrospective applications, it needs to recognize the usefulness of historical costs in valuing operating assets.

Evaluation, Cost accounting, Current value accounting

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Extracting value

Article Abstract:

Collecting corkscrews may be the ideal hobby for people who are equally interested in fine wines and bits of metal that can be used to open them. This hobby need not be expensive. Although some corkscrews can cost several thousands of pounds sterling, including 19th century Schrapnel patented corkscrews and early 18th century French designs, beginners can start a varied collection with inexpensive novelty items. Instead of going to auction houses, they can find interesting collectibles at the cheaper end of the market, at antique fairs or dealers. People new at corkscrew collecting can receive guidance from a number of books on the topic, including Bernard Watney and Hommer Babbidge's 'Corkscrews for Collectors.'

Collections and collecting, Corkscrews

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