Talk:Historical cost

please not explain net monetary items that reflectthe effects of changing prices under current cost approach.

Real value accounting

I've reverted the recent large additions, with some mixed feelings. Grateful other views. The additions seem to be conflict of interest (editor's own work, apparently self-published); I cannot find any other references by other authors. The input seems point of view (e.g. 'historical cost accounting destroys value') and not widely accepted or supported by other sources. Finally, the text added seems to largely repeat info posted by the author in other web locations, rather than adapted/used judiciously to conform to wikipedia guidelines. That said, I'm not debating the content or the relative value of that content; it just seems to have not been used judiciously here. Certainly for an encyclopedic entry more sources are required; otherwise, it gets too close to being a hobby-horse idea that needs to gain currency elsewhere first. Some of the concepts may, however, fit well in this article.--Gregalton 07:50, 29 June 2007 (UTC)

Here are other sources:

• Whittington, G., "Inflation Accounting: An introduction to the debate", Cambridge, Cambridge University Press, 1983.

• PricewaterhouseCoopers, International Financial Reporting Standards Financial Reporting in Hyperinflationary Economies – Understanding IAS 29, PricewaterhouseCoopers.

• Deloitte FINANCIAL REPORTING IN HYPERINFLATIONARY ECONOMIES, Deloitte, IAS Plus.

• International Accounting Standards Board, IAS 29 Financial Reporting in Hyperinflationary Economies, IASB.

• Paul H. Walgenbach, Norman E. Dittrich and Ernest I. Hanson, (1973), Financial Accounting, New York: Harcourt Brace Javonovich, Inc. Page 429.

• Kapnick, H., Value-Based Accounting - Saxe Lectures (1975/76):

• Norby, W.C., INTERPRETATION OF INFLATION ACCOUNTING INFORMATION - Saxe Lectures (1981/82)

A letter to the editor of Business Day, the top business daily in South Africa:

Not an increas

The South African Institute of Chartered Accountant´s monthly magazine Accountancy SA, the top accountancy magazine in SA, is going to publish this article on 1st July 2007. This article has been approved for publication since April this year.

>From: "Raina Julies" <rainaj@saica.co.za> >To: "Nicolaas Smith" <nick-smith@hotmail.com> >Subject: RE: Confirmation >Date: Tue, 3 Apr 2007 09:27:00 +0200 > >Hi Nicolaas > >Thanks for your mail. > >Yes, we will be publishing your article and I've just signed-off the >features list for our July 2007 issue. (We work with a 3-month lead >time) > >I edited the article yesterday and will be sending you the final copy >that will be published on Wednesday 11th April for your final approval. > >Could you please supply the following info: >1. Updated blurb regarding why this topic is of interest to you. >2. Qualifications and current work designation. >3. Current high-res photograph - head and shoulder shot. > >Thank you for all your patience with this back and forth mailing >regarding the publishing of your article. > >Talk soon, >Raina

"Strap Feature Headline Unpacking the Audit Report Blurb Should the Audit Report specify the value destroyed in Retained Income by the implementation of the stable measuring unit assumption?

Author Nicolaas Smith Word Count

“In most countries, primary financial statements are prepared on the historical cost basis of accounting without regard either to changes in the general level of prices or to increases in specific prices of assets held, except to the extent that property, plant and equipment and investments may be revalued.” ¹

The International Accounting Standards Board (IASB) only recognizes two economic items:

1.) Monetary items defined as “money held and items to be received or paid in money;” and

2.) Non-monetary items: All items that are not monetary items.

Non-monetary items include variable real value non-monetary items valued, for example, at fair value, market value, present value, net realizable value or recoverable value.

They also include Historical Cost items based on the stable measuring unit assumption.

One of the basic principles in accounting is “The Measuring Unit principle: The unit of measure in accounting shall be the base money unit of the most relevant currency.

This principle also assumes the unit of measure is stable; that is, changes in its general purchasing power are not considered sufficiently important to require adjustments to the basic financial statements.” ²

This makes these Historical Cost items equal to monetary items in the case of companies´ Retained Income balances and the issued share capital values of companies with no well located and well maintained land and/or buildings or other variable real value non-monetary items able to be revalued at least equal to the original real value of each contribution of issued share capital.

Retained Income is a constant real value non-monetary item valued at Historical Cost which makes it subject to the destruction of its real value by cash inflation – exactly the same as in cash.

It is an undeniable fact that South Africa’s functional currency’s internal real value is constantly being destroyed by cash inflation in the case of our low inflationary economy, but this is not considered important enough to adjust the real values of constant real value non-monetary items in the financial statements - the universal stable measuring unit assumption.

The combination of the Historical Cost Accounting model and low inflation is thus indirectly responsible for the destruction of the real value of Retained Income equal to the annual average value of Retained Income times the average annual rate of inflation. This value is easy to calculate in the case of each and very company in South Africa with Retained Income. It is also possible to calculate this value for all companies in the world economy with Retained Income.

It is broadly known that the destruction of the internal real value of the monetary unit of account is a very important matter and that inflation thus destroys the real value of all variable real value non-monetary items when they are not valued at fair value, market value, present value, net realizable value or recoverable value.

But, everybody suddenly agrees, in the same breath, that for the purpose of valuing Retained Income - a constant real value non-monetary item - the change in the real value of money is not regarded as important to update the value of Retained Income in the financial statements. Everybody suddenly then agrees to destroy hundreds of billions of Dollars in real value in all companies´ Retained Income balances all around the world.

Yes, inflation is very important!

All central banks and thousands of economists and commentators spend huge amounts of time on the matter. Thousands of books are available on the matter. Financial newspapers and economics journals dedicate thousands of columns to the fight against inflation.

But, when it comes to constant real value non-monetary items, it doesn’t seem as if inflation is important. We happily destroy hundreds of billions of Dollars in Retained Income real value year in year out.

However, when you are operating in an economy with hyperinflation (perhaps only Zimbabwe at the moment with 3 713% inflation), then we all agree that you have to update everything in terms of International Accounting Standard IAS 29 Financial Reporting in Hyperinflationary Economies. You have to update variable AND constant real value non-monetary items.

But, ONLY as long as your annual inflation rate has been 26% for three years in a row adding up to 100% - the rate required for the implementation of IAS 29.

Once you are not in hyperinflation anymore, for example, 15% annual inflation for as many years as you want, then you are not allowed to update constant real value non-monetary items any more. Then you must destroy their real value again – at 15% per annum. Or 7.0% per annum in the case of South Africa (April 2007).

For example:

Shareholder value permanently destroyed by the implementation of the Historical Cost Accounting model in Exxon Mobil's Retained Income during 2005 exceeded $4.7bn for the first time. This compares to the $4.5bn shareholder real value permanently destroyed in 2004 in this manner. (Dec 2005 values).

The application by BP, the global energy and petrochemical company, of the stable measuring unit assumption in the accounting of their Retained Income resulted in the destruction of at least $1.3bn of shareholder value during 2005. (Dec 2005 values).

Royal Dutch Shell Plc, a global group of energy and petrochemical companies, permanently destroyed $2.974 billion of shareholder value during 2005 as a result of the application of the stable measuring unit assumption in the accounting of their Retained Income. (Dec 2005 values).

Should this value be reflected in the financial statements? Maybe it should.

Footnotes

¹ International Accounting Standards Committee, (1995), International Accounting Standard 1995, London, IASC, Page 502 ² Paul H. Walgenbach, Norman E. Dittrich and Ernest I. Hanson, (1973), Financial Accounting, New York: Harcourt Brace Javonovich, Inc. Page 429."

I can place hundreds more references to the fact that the stable measuring unit assumption destroys real value in non-monetary items not updated. The accounting profession has been struggling with this problem for the last 70 years. There are thousands of references. Please be specific and tell me exactly how many references you want to be quoted.

It is not my point of view that 'historical cost accounting destroys value'. All accountants know that as a fact for a very, very long time. Why do you think the International Accounting Standards Board have developed all the International Standards for valueing non-monetary items at fair value, net realisable value, market value, present value and recoverable value? There are millions of accountants in the world. It is a fact. Not a point of view. It is not a theory. It is a well known and generally accepted fact for a very long time.

"The Measuring Unit principle: The unit of measure in accounting shall be the base money unit of the most relevant currency.

This principle also assumes the unit of measure is stable; that is, changes in its general purchasing power are not considered sufficiently important to require adjustments to the basic financial statements.” ² ² Paul H. Walgenbach, Norman E. Dittrich and Ernest I. Hanson, (1973), Financial Accounting, New York: Harcourt Brace Javonovich, Inc. Page 429."

If you can prove to the world that it is not true, then all the accountants in the world and the whole world economy are waiting for your miracle. Please go ahead. I am open to your new facts. Maybe you believe it is not true and want to call it "bookish" economics like President Robert Mugabe of Zimbabwe when the stable measuring unit assumption is destroying his country this very moment in the grip of 4530% annual inflation. Well, you can join Robert Mugabe. At least he will then not the only person having ideas like that.

You say the input "seems" point of view. My response is that you "seem" to be out of your depth removing posts that you "seem" not to know enough about. Are you a chartered accountant?

This information obviously has been posted elsewhere on the web. I have over 1100 postings only on the NewZimbabwe.Com forum where I am trying to explain to the people in Zimbabwe whose economy is this very minute being destroyed by the stable measuring unit assumption what is happening in their economy. I doubt if you know about that.

I was offered a publishing contract for the book by Juta Academic Publishers in South Africa. They were going to publish the book. Being my first book, we could not agree on royalty terms. That was the only reason that Juta Academic Publishers did not publish the book.

Do you need proof of this? Do I need to get a letter for you from Juta Academic Publishers of this fact? It was some time ago. I do not have copies of all the email correspondence to prove this to you, but, if you want me to prove that, I am sure I can get them to send me an email that they did in fact offer me a publishing contract for the book at the time.

I don´t know if you have heard of the following self-published books:

In Search of Excellence by Tom Peters Ulysses, by James Joyce The One-Minute Manager by Ken Blanchard and Spencer Johnson

There are many, many more.

Since you have decided to take the posting off, you are obviously now the only person in the world that can decide to put it back. It seems to me that is how it works.

Could you please specify in numbered point form what you personally require for the posting to be put back with the extra references. It seems to me that you are now the only person with the power to give that permission to put it back. If you can number you requirements I can satisfy them one by one and we can methodically go through the process of putting the posts back on.

Or is you decision to take it off final?

I must say I think you are a bit taken with the power you have to just take things off over here. You could have asked for more references - of which I can obviously give you hundreds - it was not necessary to demonstrate the power you have to take new posts off at your own free will.

I think you should be a little more circumspect to just remove complete posts for lack of more references or because you think that too much information has been given in the context of wikipedia.

You moderators seem to enjoy removing posts that you know very little about even though you seem to proclaim that you are suffieciently qualified to be moderator for this topic.

A previous remark I got from a wikipedia person was: patent nonsense. He knew even less about the subject that he was suppose to moderate than you.

It seems to me that you basically want more references and you think the post is too long. Is that it?

Please tell me how many references you want and how long do you want the post to be? Only half the length or 25% or 75% or what? The more specific you can be the easier it is for me to satisfy you particular requirements.

You say you cannot find other references by other authors. This is commonly seen as inflation accounting. I don´t know if you know the term at all. Obviously not. I do not treat it as such since it amounts to the change of the global Historial Cost paradigm. It is a paradigm change. If I have used the term inflation accounting you will find more than a million references to it on the internet. Most people will tell you this is inflation accounting. It is in the sense that Real Value Accounting stops Historical Cost Accounting inflation. It is not in the sense that Real Value Accounting may eventually replace the global Historical Cost Accounting model as the basic universal accounting model. This second aspect is of far more importance than the first one.

The reason I do not treat Real Value Accounting as inflation accounting is because inflation accounting is only applied in hyperinflationary economies. Real Value Accounting is applied in all economies - low inflation and hyperinflationary economies. That is very easy to understand why I do not treat it as inflation accounting of which you would have immediately found more than a million references on the internet.

You state that: "I'm not debating the content or the relative value of that content", but, it was not of sufficient content and value for you to leave it on and get some more references and get the content reduced. You have the power to take it of for missing references, so you did.

I can point you to other wikipedia articles with different moderators who put a statement right in the beginning of the article that the article lacks references and then they ask for references to be added. Not you. You have the power to take it off, so you took it off.

Well, I am waiting for your instructions as to what I have to do to please someone who does not put a notice on an article that it needs references as other wikipedia moderators do.

Or is the Wikipedia rule, that I should of course know, that when one reference is supplied, you take the article off and if no refences are supplied you leave the article on and put a notice in the beginning of the article in which you point this out and ask for references?

That is what your deletion of the article amounts to: too much content: you take it off. Only one reference: you take it off.

Please state how many references you want and how long the content must be.

Please put a link on here where I can find the post I made or did you delete it completely?

You state: "Finally, the text added seems to largely repeat info posted by the author in other web locations, rather than adapted/used judiciously to conform to wikipedia guidelines".

The post summuarises a book of 235 pages. In that context I would say it was a judicious post - encyclopedic.

I must say that I totally disagree with your very rash decision to remove the post. You could have simply asked to have the post reduced and with more references. What is wrong with that seeing that that is the way it is done by other moderators?

You looked for references but you did not know what to look for. Google inflation accounting and you have 1.3 million references. I am not saying anything new. Everything I say all accountants already know. I just say it in a different way. That is why it is so easy for accountants to understand what I say.

I do not think you are an accountant. Otherwise you would have understood the post straight away.

Nicolaas Smith 09:38, 29 June 2007 (UTC)

Too much above to respond to in detail. First, please calm down, read the various WP policies, etc. Lay off the personal attacks.

I could not find anything that used the (capitalized) phrase "Real Value Accounting" except for your own work. Whether it was going to be published or not, it has not been published. The other references you used above can be quoted and inserted.

You posted essentially the same content in other articles - not necessary, redundant.

Long, technical, not very readable. My personal opinion. I could not edit it down in part because it was so incredibly long and involved.

You say "historical cost accounting destroys value." This is, in my opinion, contentious and tendentious. The value is not destroyed by accounting, which is nothing more than an estimate of value; the estimate of the (destroyed or not) value is wrong. Feel free to disagree.

My suggestion to edit slowly at first is based on the fact that you appear to be a new editor. Welcome. Please take these suggestions as in good faith: editing carefully at first gives a chance to learn the ropes. Be less sensitive about edits of your work. Please understand there are a lot of problems here with spam, conflict of interest (people promoting their own sites, books, theories, etc), hobby-horse editors, highly opinionated editors who cannot or will not attempt to be neutral. If you tread more cautiously at first, there is less likelihood that you will be interpreted as one of those.

Hope this helps, and hope that the information you evidently know can be incorporated into making the article better.--Gregalton 14:00, 29 June 2007 (UTC)

"I could not find anything that used the (capitalized) phrase "Real Value Accounting except for your own work ": This article is about Historical Cost. I am sure you will agree.

It is a pity that you did not read my complete response. Real Value Accounting is the another name for inflation accounting. Google inflation accounting and you will find 1.3 million references about this matter that are not my work.

"it has not been published" That is an untruth. It has been published. Here is the link: [1] in the Portuguese National Library.

"The other references you used above can be quoted and inserted." Where do I find the post as I have asked before?

"You posted essentially the same content in other articles - not necessary, redundant." If I have to take you serious, we must then just leave it here: redundant?

OK. Then that is your final verdict: Redundant.

"Long, technical, not very readable. My personal opinion. I could not edit it down in part because it was so incredibly long and involved."

Ok, I will shorten it. You are not an accountant. Accountants will find this very readable.

I ask again, where do I find the post to do that?

"You say "historical cost accounting destroys value." This is, in my opinion, contentious and tendentious. The value is not destroyed by accounting, which is nothing more than an estimate of value; the estimate of the (destroyed or not) value is wrong. Feel free to disagree."

The whole world disagree with you. Absolutely everybody including you know that inflation destroys value. You have apparently read very little about the post and seems not to be interested. Read the post and you will see inflation has two components - monetary and non-monetary. Both destroy value. I cannot rewrite the whole post for you. If you are not prepared to read it, then that is it. You seem not to be interested to read and understand the post to find out how inflation destroys real value in non-monetary items not updated.

I do not understand your role as a moderator. I expected the moderator to read the whole post and understand it. If you are not prepared to do that, why are you the moderator over here?

That is personal and I must just accept everything you say. When you say inflation does not destroy value I have to disagree.

That is what this is about. If you are not prepared to read the post and follow that, then I will have to ask wikipedia for some other moderator who is prepared to simply read and follow that post.

"Hope this helps, and hope that the information you evidently know can be incorporated into making the article better"

Where do I find the work I added previously in the Historical Cost article?

I did not say that inflation does not destroy value. I said that the _accounting_ does not destroy value, which is what you wrote. As for Real Value Accounting, this capitalization means (in English) that this is an accepted term. But you say that it is another name for inflation accounting - why not use the accepted term? As for finding the post, read the instructions. And keep in mind that Wikipedia is not specialized for accountants. Whether I am an accountant or not is not the issue - it should be written for the general public.--Gregalton 14:52, 29 June 2007 (UTC)

What instructions?

Where can I find out if you are not prepared to tell me?

Start with About Wikipedia. There are subsections and links on editing, contributing and how it works.--Gregalton 07:11, 30 June 2007 (UTC)

I've tried to edit down and rearrange a bit; frankly, it's a bit long and over-involved (clearly adapted from some longer article, rather than written anew with straightforward definitions and explanations), so I'm sure my editing lost some key bits in places. There was a lot of repetition and unnecessary formatting, however.

Now, a straightforward question and a suggestion:

Q: you have used repeatedly the expression "real value accounting" and "real value accounting model"; could you provide a reference or link to this that is not written by you?

Suggestion: it seems to me this entire section would be better as a separate article on inflation accounting. There is not one now; you can click on the red to create one.--Gregalton 07:33, 30 June 2007 (UTC)

I've been re-reading - partly - your flurry of points above. You keep referring to "posts", but please keep in mind this is not a webforum or bulletin board. They're contributions to articles (although on this page I guess they are posts, of course). Best regards--Gregalton 07:36, 30 June 2007 (UTC)

You left this in the article:

"Inflation has two components under the current Historical Cost paradigm: cash inflation and historical cost accounting inflation"

Then you deleted the definition of historical cost accounting inflation. Do you think it is logical to say there are two components and then to define only one?

It was stated in the previous version that there are two components and the article was written on this basis. You did away with the division of the article in two parts.

I understand that if you feel that accounting does not destroy value then you obviously would not state the definition that shows how accounting destroys value. So, I suppose because you take this opportunity to try and prove what you stated earlier, namely that accounting does not destroy value is correct, it is obvious that you will delete the definition.

Then please you delete the article. The article is about the fact that accounting destroys value. If you decide to delete that definition then there is no purpose for the article.

Please go ahead and delete the article if you are not prepared to show that definition that is the critical point of the article. You went ahead and deleted the most important part of the artcle. Obviously then there is not article when you do that.

Please delete the article under those circumstances.

I suppose you would rather agree with another wikipedia moderator, Pablo, that called this patent nonsense.

This article (historical cost) is about historical cost; YOUR article is about "the fact that accounting destroys value." If you wish to prove something by citing your own work, there are probably other forums for that.--Gregalton 09:55, 30 June 2007 (UTC)

Conflict of interest

Note the phrase "real value accounting" and the practice thereby derived appears to be patented, and judging by the phrasing and terminology, by the editor above. Please see: [2] [3] This appears to be a clear case of conflict of interest, presumably with personal benefit at issue. For the editor: please review WP:COI carefully.--Gregalton 07:40, 30 June 2007 (UTC)

Real value accounting and the practice thereby derived is not patented. A patent search will not provide a positive result since such a patent does not exist. Please do a patent search at the US Patent Office site. The fact that a comercial site on the internet making money out of some aspect of the patenting process (I don´t know which in this case as I have no interest there in) incorrectly states that it is a patent, does not make it a patent. I have informed that site that it is not a patent and have asked them to change it. They obviously incorrectly post patent applications as patents. I do not think they will change it.

I made a patent application not for the practice of real value accounting since you cannot patent an accounting practice but for a computer program implementing inflation accounting. The patent application generally relates to the field of automated business data processing technologies. That does not mean I have a patent or will ever have a patent for that accounting program. Any person can make a patent application for anything he or she imagines he or she invented. Applying for a patent does not make it an invention or a patent. As long as the patent application procedure is correct the patent granting authority is obliged by their own rules to process the patent application. That is what has been going on since 2004. The USPTO will decide whether the computer program is an invention or not.

I do not gain any personal benefit from real value accounting. The book is a free download on the Social Sciences Research Network at SSRN . 442 free downloads have been made so far.

I do not understand what my blog has to do with the patent application. It is just a blog.

I apologise for my response to you deleting the article.

Feel free to take the article off. It is not possible to stop facts. You taking it off will not stop the fact that accounting destroys real value in constant real value non-monetary items not updated. You stating that it does not is not true as all accountants will be able to tell you.

I can see that you are looking for some technicallity to take the article off because of my direct approach to your direct deleting the article at first sight without discussing it. So just go ahead and take it off.

Please just read the WP:COI policy. The point is not whether or not you do have a patent, it is whether you have a personal interest (monetary or otherwise) in the concept; applying for a patent implies that you do. The same holds for your book: the fact that it is free does not remove a conflict of interest (you did say you tried to publish it in book form, which also implies you have an interest).

You seem to think I'm searching for reasons to delete your contribution. I'm not. I'm trying to hold it to the policies. And make it readable. So that this article is better. As written, it is just a cut-and-paste of your other work, in your original contribution virtually verbatim from your blog. Articles on Adam Smith don't cut-and-paste the Wealth of Nations; it's not an encyclopedic form or accessible as an encyclopedia article.

You believe accounting destroys value. I dispute that (I would say the value exists, it is mis-stated), and would ask that you provide a verifiable reference to get over the contention. Or I would suggest simply reformulating: "historical cost accounting statements will be inaccurate in inflationary situations, and particularly so in hyperinflationary economies. See inflation accounting." (Fill in article.)

Is this unreasonable?--Gregalton 09:47, 30 June 2007 (UTC)

Provide a verifiable reference that accounting destroys value? I think I will be able to get you a million. Easily. I will post them here till you can see that accounting destroys value. Please wait.

In this discussion above I copied the article that should appear at midnight (South African time) on the Accountancy SA site. The title of the article is " Unpacking the Audit Report - Should the Audit Report specify the value destroyed in Retained Income by the implementation of the stable measuring unit assumption?"

What more do you want? I also copied the email where the editor of Accountancy SA, Raina Julies, confirm that they are going to publish the article in their July 2007 issue - due in 13 hours time.

Let´s wait till midnight tonight and we should be able to see it in the top accountancy magazine in South Africa, which is one of the top magazines and accounting proffessions in the world today.

Anything not written by you?--Gregalton 10:21, 30 June 2007 (UTC)

Anecdotal for now: There is a link on the internet to a university in America - a female professor gives the class - that actually has an accounting course in Real Value Accounting. I did not save the link. I had it about a year or two ago. Only one. But it does actually exist. An accounting course in Real Value Accounting.

I can give you many mentions of Real Value Accoutning on the NewZimbabwe.com forum for Zimbabwe where they call me Mr RVA. There is one thread titled Real Value Accounting. I did not start it. Real Value Acounting is mentioned many times by the participants in the forum discussing it with me and between themselves.

In any case International Accounting Standard IAS Financial Reporting in Hyperinflationary Economies is 95% real value accounting.

Then why not use IAS/IFRS29 since it is more standard than RVA, and since the references referring to RVA are anecdotal (save those directly linked to you)? Without any slight intended, the same statement could be reformulated "RVA is 95% IAS29." And for IAS29, no conflict of interest issues come up. After that, a footnote explaining the difference between IAS29 and RVA would look more in place. And to reiterate: this would all be best in a separate article on inflation accounting.--Gregalton 11:09, 30 June 2007 (UTC)

The UK companies act states that the basic accounting principles are so basic that they do not have to be stated.

The fact that Historical Cost Accounting destroys value is also so basic that you do not have to state it. Why are prices updated world wide to keep track with inflation even in low inflationary economies? As you can see, it is a very basic fact.

I think for the sake and good knowledge of Wikipedia users you can stay with your statement as stated very clearly above that accounting does not destroy value which is completely and utterly untrue as proven by the issue in April 1989 of International Accounting Standard IAS 29 Financial Reporting in Hyperinflationary Economies by the International Accounting Standards Board and all published books, articles and research on inflation accounting.

I don´t know what you are going to tell Wikipedia users when they ask you what the purpose of inflation accounting and IAS 29 are and - lo and behold - I do not know what Wikipedia is going to tell them when they ask you why prices are updated with inflation. That is Wikipedia´s problem. Not mine.

You are quite safe. Not many Wikipedia readers will read this section.

Here is the defintion of Historical Cost Accounting inflation that you mention but refuse to define:

Historical Cost Accounting inflation is the Historical Cost Accounting practice whereby accountants world wide destroy the real value of constant real value non-monetary items (eg. retained income - a shareholder value) not fully or never updated over time due to the use of the Historical Cost Accounting model or any other accounting model which does not allow the continuous updating of constant real value non-monetary items in an economy subject to low cash inflation.

I would likely cite a reputable source, such as the PWC report you referenced:

"Significant changes in the purchasing power of money mean that financial statements unadjusted for inflation are likely to be misleading. Amounts are not comparable between periods, and the gain or loss in general purchasing power that arises in the reporting period is not recorded. Financial statements unadjusted for inflation do not properly reflect the company’s position at the balance sheet date, the results of its operations or cash flows. Inflation-adjusted financial statements are an extension to, not a departure from, historical cost accounting."

I can see no mention here that value is destroyed by accounting; I can see that value may not properly be reflected. An issue with any accounting methodology, all of which are estimations.--Gregalton 12:32, 30 June 2007 (UTC)

Here is proof that value is destroyed by accounting:

This is a quote from the top of this page from the article that should appear in a few hours in Accountancy SA.

"In most countries, primary financial statements are prepared on the historical cost basis of accounting without regard either to changes in the general level of prices or to increases in specific prices of assets held, except to the extent that property, plant and equipment and investments may be revalued.”

The International Accounting Standards Board (IASB) only recognizes two economic items:

1.) Monetary items defined as “money held and items to be received or paid in money;” and

2.) Non-monetary items: All items that are not monetary items.

Non-monetary items include variable real value non-monetary items valued, for example, at fair value, market value, present value, net realizable value or recoverable value.

They also include Historical Cost items based on the stable measuring unit assumption.

One of the basic principles in accounting is “The Measuring Unit principle: The unit of measure in accounting shall be the base money unit of the most relevant currency.

This principle also assumes the unit of measure is stable; that is, changes in its general purchasing power are not considered sufficiently important to require adjustments to the basic financial statements.

This makes these Historical Cost items equal to monetary items in the case of companies´ Retained Income balances.

Retained Income is a constant real value non-monetary item valued at Historical Cost which makes it subject to the destruction of its real value by" Historical Cost Accounting inflation in the same way as cash inflation destroys the real value of money over time.

You are not allowed to update Retained Income in a low inflation economy under the rules Historical Cost Accounting. It is the same as a monetary item and its real value is continuously destroyed by Historical Cost Accounting inflation not cash inflation.

That is proof that accounting destroys value in all companies in the world with retained income this very moment.

This has been happening for the last several hundred years since the introduction of Pacioli´s double entry accounting model in Venice, Italy in about the year 1300.

It is not a case "that value may not properly be reflected". This is real value destroyed in the real value of all Retained Income balances world wide. The value is correctly reflected as in a monetary item, for example, cash in the bank or on hand. Money´s value is always up to date since its real value is continuously being destroyed by cash inflation.

Money´s real value is always properly reflected as a result of cash inflation.

The same happens to the real value of Retained Income in all companies. Retained Income´s real value is also always properly reflected as a result of Historical Cost Accounting inflation.

In the case of Retained Income it´s real value is being destroyed by Historical Cost Accounting inflation which is the Historical Cost Accounting practice whereby accountants world wide destroy the real value of constant real value non-monetary items (eg. retained income - a shareholder value) not fully or never updated over time due to the use of the Historical Cost Accounting model or any other accounting model which does not allow the continuous updating of constant real value non-monetary items in an economy subject to low cash inflation.

You are repeating the point, without presenting a citation that actually states what you claim you have proved: that the accounting itself destroys value. I understand your point: I disagree. My point is: historical cost accounting does not destroy value; inflation does.

The situation remains the same within the article. You are pushing your definition, rather than one that is more widely documented, referenced, from reliable sources. I see no point in belabouring this particular minor point.

As an aside, this discussion would be easier to read if you signed/stamped your entries using the signature button, or inserted two dashes (-) and four tildes (~) (no space). These types of things are in the instructions found by following about wikipedia, as are points about No Original Research, POV, citation/referencing policy, conflict of interest and other interesting stuff that may be applicable.--Gregalton 13:17, 30 June 2007 (UTC)

I understand what you want with a citation. I can point to the UK companies act that states that when something is very basic you do not have to state it.

The stable measuring unit assumption is part of Historical Cost Accounting.

You are absolutely correct that Historical Cost Accounting - in an instant in time - does not destroy value. Only in that case and in the case of sustained 0% cash inflation at which point the Historical Cost Accounting model automatically becomes the Real Value Accounting model without anyone doing anything. It happens automatically but only at sustained 0% cash inflation over time.

Historical Cost Accounting implemented over time does destroy real value because it incorporates the stable measuring unit assumption.

The stable measuring unit assumption is revoked under Real Value Accounting. That is what this is all about. When the stable measuring unit assumption is revoked it stops Historical Cost Accounting inflation in fact and by definition. When the stable measuring unit assumption is revoked the Historical Cost Accounting model becomes the Real Value Accounting model which leads to 0% destruction of value in all non-monetary items - all else except cash inflation being equal.

My apologies. I normally state that the combination of the Historical Cost Accounting model and inflation destroys real value. Inflation only happens over time. Nicolaas Smith 13:51, 30 June 2007 (UTC)

So your citation is a citation saying that you don't need to have a citation? Ingenious ;).--Gregalton 14:07, 30 June 2007 (UTC)

Gregalton stated above: "historical cost accounting does not destroy value".

:The actual definition of the stable measuring unit assumption in itself proves that historical cost accounting destroys value. You need nothing more. Just the definition of the actual thing that defines Historical Cost Accounting at the same time proves and declares that it, the Historical Cost Accounting model, destroys real value. Gideongono 11:39, 7 July 2007 (UTC)

Peer Review for Real Value Accounting

I have found the following Peer Review for Real Value Accounting on the internet. What better peer review can you get than when the head of a country´s international accounting standards department, who seems to be a PhD, states that he agrees 100% with the author, especially after Turkey has been through a period of hyperinflation?

International Accounting Forum

Dr Kucuksozen, the head of their International Accounting Standards Department, the manuscript to read before publication. This is what he states in public:

"I examined your book and understood that Real Value Accounting is based on the continuous updating of non-monetary units in terms of the Consumer Price Index to today’s real value.

Theoretically, I totally agree with you. But, as you know, there is a trend toward the acceptance of International Accounting Standards and International Financial Reporting Standards issued by the International Accounting Standards Board all over the world. For example, the International Organization of Securities Commissions (IOSCO) recommends harmonization of national accounting standards with IAS and IFRS. Also, the European Union introduced the requirement that from 2005 onwards, all listed companies have to prepare their consolidated accounts in accordance with IAS and IFRS adopted for application within the European Community. Considering international developments and as a candidate country for full membership, Turkey has issued a communiqué involving all IAS and IFRS and began application of them from the beginning of 2005 (As you know, we began application of IAS 29 in 2003).

In this regard, we can change over to real value accounting when there is a change in IAS/IFRS toward real value accounting or there is a trend toward real value accounting all over the world."

Joeblogger 06:24, 4 July 2007 (UTC)

Congratulations Gregalton!! I see everything about Real Value Accounting has been removed from Wikipedia. Gregalton you have contributed to make the world a better place!! lol

Miss World 13:51, 7 July 2007 (UTC)

Gregalton declares to the world: "historical cost accounting does not destroy value" lol It is a good thing you are using an avatar. That is exactly the same as saying money does not lose value. And you know that. The stable measuring unit assumption is exactly the same as inflation. So saying that HCA does not destroy value is the same as saying there is no inflation. That is what HCA "ASSUMES" . IT IS NOT A FACT. DO YOU REALIZE THAT?????? IT IS AN ACCOUNTING ASSUMPTION!!!!!! THAT DOES NOT MAKE IT A FACT!!! An assumption is an assumption. A fact is a fact. The accounting assumption in HCA does not annul the fact in the economy that when HCA never updates non-monetary items because of the stable measuring unit assumption HCA destroys their real values. HCA destroys real value. That´s it. I AM SURE YOU UNDERSTAND THAT!!!! AN ASSUMPTION IS NOT A FACT. MONEY LOSES VALUE UNDER INFLATION AND HCA IN THE SAME WAY DESTROYS VALUE WHEN THE STABLE MEASURING UNIT IS APPLIED.

I am sure you must feel so good with kicking Real Value Accounting and Nicolaas Smith from Wikipedia. Congratulations!!

Miss World 14:05, 7 July 2007 (UTC)

Unfortunately, the liberal use of capital letters has not made the argument any easier to understand. A reference might.

And please note that I have not kicked anyone out. It seems Mr. Smith has decided on his own to take his football and go home.

For other editors, please note all of the above edits seem to come from single-purpose accounts, possibly puppets, and the same argument/text is repeated on inflation and hyperinflation pages.--Gregalton 14:33, 7 July 2007 (UTC)

I agree with Gregalton: The historical cost principle as applied in historical cost accounting never destroys real value.

Economy speak 15:04, 7 July 2007 (UTC)

The historical cost principle as applied in historical cost accounting never destroys real value

The historical cost principle as applied in historical cost accounting never destroys real value.

I agree with Gregalton. It is a fact that historical cost accounting never destroys real value.

It is absurd to suggest that the global Historical Cost Accounting model destroys real value. How can that be? It is impossible to suggest that all accountants are destroying real value in the way they do accounting and that this has been carrying on for ages. Absolutely impossible. What patent nonsense.

It is an incontrovertable fact that historical cost accounting does not destroy value. There are absolutely not a single verifiable source to prove that Historical Cost Accounting destroys value.

Reliable source for the incontrovertable fact that historical cost accounting does not destroy value.

Economy speak 16:56, 7 July 2007 (UTC)

I don't know anything at all about economics. So, since I'm a layman and it isn't at all obvious to me, why don't you indulge me and provide a reliable source anyway? In any case, this should not be the first paragraph of the article- it isn't a basic definition of the term 'accountancy.' You should probably read WP:3RR before you make any more reverts on this article. -FisherQueen (Talk) 17:16, 7 July 2007 (UTC)

Gregalton, with reference to your statement above on this page that "historical cost accounting does not destroy value" - which I agree 100% with you - can you please indulge FisherQueen and provide a reliable source? Thank you.

Economy speak 17:39, 7 July 2007 (UTC)

I do not have a specific reference that states in those words what I wrote; the quote is above that historical cost _misstates_ the reality (not that it destroys it). In contrast, the opposite point was made - that it destroys value - without supporting documentation (or substantive argumentation). I stated my opinion on the talk page, not in the article; I don't think it should figure in the article. What I was arguing was that the argument that historical cost accounting destroys value is POV, not supported or referenced, and should not figure in the article either. To me this "accounting destroys value" statement is absurd, rather like saying a photograph of a car accident caused the car accident. But the statement that it never destroys value is not needed (and has also not been documented, and so should not be included). The real point is that most of this stuff was not wikipedia material. IMHO.

I also strongly disagree with your revert war back and forth. This article is not about whether or not it destroys value, and no such claim needs to be made either way (true or not). Is it central to the article? No. Therefore, leave it out.--Gregalton 20:44, 7 July 2007 (UTC)

Please note that, judging from the accountancy discussion and revert war, Economy speak appears to be another single-purpose account, possibly the same person/group of people, just taking the opposite side of the coin. Should probably just be ignored.--Gregalton 04:58, 8 July 2007 (UTC)

Removal of discussion content

An editor has removed large sections of discussion content. I consider this inappropriate, and think it should be restored (or at least properly archived). Anyone know the policies/tools here better than me on this subject? It does not seem correct for an editor to remove part of a discussion in this way.--Gregalton 20:56, 7 July 2007 (UTC)

I concur and have restored the discussion. As the editor removed comments that had already been responded to, it is inappropriate to remove them. If there is something inappropriate about the text removed (some copyvio or inappropriate private information), then please state this when removing the text and we can clean it up. Creating an archive is the desired solution, but that seems odd as the discussion is active. Kuru ^talk 22:09, 7 July 2007 (UTC)

Asking permission to add the fact The Historical Cost paradigm which incorporates the universal stable measuring unit assumption results in inflation having two components: a monetary component and a

I am asking permission to add the fact that the Historical Cost paradigm which incorporates the universal stable measuring unit assumption results in inflation having two components: a monetary component and a non-monetary component.

D´Artgnan 09:11, 9 July 2007 (UTC)

I wish to withdraw this request.

Wikipedia editor Gregalton proved to me that inflation only has one component and that there no such thing as a non-monetary component of inflation.

D´Artgnan 16:35, 9 July 2007 (UTC)

Wikipedia editor Gregalton´s attitude and behaviour is very detrimental to the spirit of Wikipedia.

To all editors:

Wikipedia editor Gregalton´s attitude and behaviour is very detrimental to the spirit of Wikipedia.

It can be verified quiet easisly in the history section that he does not allow people eminantly more qualified than him to add to the article. He reverts their entries and then studies the references and summarises the entries with his own often incorrect entries. He thus proclaims that he is the final referee and contributor to this article. Anyone can verify this in the history file.

I propose that Gregalton be banned as a Wikipedia editor for some time till he changes his very detrimental attitude.

Can anyone advise me how I go about to get this done? I would appreciate that. It is very easy to prove from the history file what I am saying.

D´Artgnan 17:12, 9 July 2007 (UTC)

Gregalton please dont reply to anything without first citing a reference that says exactly what you want to say.

Gregalton please dont reply to anything here without first citing a reference that says exactly what you want to say.

If you cannot do that, then just keep quiet. Only references that, beforehand, say exactly what you are saying, are acceptable.

D´Artgnan 17:40, 9 July 2007 (UTC)

Gregalton you stated that historical cost accounting never destroys value. I request a reference that states exactlty that please.

Gregalton you stated that historical cost accounting never destroys value. I request a reference that states exactlty that please. Exactly as you request from me.

I am waiting.

Otherwise you better state that you cannot prove that Historical Cost Accounting does not destroy value. And you have to prove that with a reference too that state exactly what you are saying.

I am waiting.

D´Artgnan 17:51, 9 July 2007 (UTC)

Here's the logic of burden of proof: I didn't write in the article that it never destroys value. In the talk page, I disputed the claim made by some editor in the article that it does destroy value. Until the dispute is settled, or some reason to consider the claim notable (like a reference) is provided, it is not encyclopedic material. You can write just about anything here. Some have. That may or may not convince anyone (it hasn't convinced me here, and I haven't convinced you either). Neither statement is "material" for the article page.

So, I can say Alexander Hamilton was a large, air-breathing fish here on the talk page. You can disagree. You would not have to produce references disproving this point for the purposes of the article, and, to support such a claim (no matter how obvious to the other landfish) a reference may be required for me to include such a claim in the article. Were I to write that in the article, you would be fully justified in requesting references and documentation.

This is an exaggeration. I am in no way comparing historical cost or other forms of accountancy to

fish.--Gregalton 19:08, 9 July 2007 (UTC)

The quality of these Wikipedia articles on historical cost, inflation, hyperinflation etc are pathetically low. Why? Your way of treating people here is a very good example why.

You show no sensitivity to anything. When someone has some valid points, you will not say that. You always play your trump card: show me a reference that says exactly that.

So good luck with your shitty articles. They will stay shitty as long as shitty editors like you reign suppreme over them.

D´Artgnan 19:24, 9 July 2007 (UTC)

You asked me questions. They appear on these pages. When I made a sincere effort of giving you detailed answers - that took a lot of my time - you simply ridicule me that I answer with a thesis.

And that is the truth. Anyone can verify that.

No, that is not ridicule. That is very constructive. Not a single Wikipedia editor here will give you a warning about that. That is very conmendable behaviour from you.

When my "thesis" proves the points I make you simply say: give me a reference that says EXACTLY that.

Good luck. Good for you. Carry on like that.

Ask editors questions and when they give you detailed answers ridicule them that they answer with a thesis.

Excellent Wikipedia stuff. At least you have shown me exactly what Wikipedia is all about: described in the previous paragraph.

Go for it: ridicule me more. I will get the warning. Not you. Don´t waste your warnings on me. I got your point.

D´Artgnan 19:44, 9 July 2007 (UTC)

Please stop filling up these talk pages (and many others) with your POV. Gregalton has been civil in explaining why your additions are questionable. If you had familiarized yourself with Wikipedia guidelines perhaps your contributions would have been more readily accepted. If you continue to make personal attacks, continue to change articles against consensus, or continue to use sockpuppets you will eventually get banned. -- Diletante 22:20, 9 July 2007 (UTC)

Real Value Accounting is correct but it is original research.

I have been following the Real Value Accounting saga here on Wikipedia for a while.

It is obvious that Nicolaas Smith is correct in his original research in which he proves the following facts:

1. Inflation has two components: a monetary and a non-monetary component or Cash Inflation and Historical Cost Accounting Inflation.

2. Accountants destroy real value by applying the stable measuring unit assumption in their implementation of the Historical Cost Accounting model. Historical Cost Accounting thus destroys value.

3. Real Value Accounting would stop this destruction of value in the world economy.

Nicolaas Smith has to accept that although his original research is 100% correct Wikipedia is not the place to get recognition for it.

There is absolutely no place for any Real Value Accounting concepts on Wikipedia.

As Gregalton states: Gregalton needs verifiable, credible references contributed by editors other than Mr Smith that states exactly what Mr Smith states in exactly the same words. Nothing else is acceptable to Gregalton who is the Wikipedia editor for this article who decides what will appear in the article and what will not appear in this article as he proved very successfully in this article.

Spectacled Owl 07:59, 10 July 2007 (UTC)

Here is a copy of the Wikipedia policy on self-publishing:

Self-published and questionable sources in articles about themselves Material from self-published and questionable sources may be used as sources in articles about themselves, so long as:

it is relevant to their notability; it is not contentious; it is not unduly self-serving; it does not involve claims about third parties; it does not involve claims about events not directly related to the subject; there is no reasonable doubt as to who wrote it.

Maybe Gregalton can follow this policy - if he wants to.

Apparently self-published material may be used.

Are there any ohter viewpoints on this? Or is it only Gregalton that is watching this article?

What do you say Gregalton? The policy say self-published material may be used. Since you are the only person that can ok this article.

It is obvious that the self-published material is relevant to its notability. Gregalton, if you find the material contentious, can we agree to put this article in contention. There is a way of doing this. Gregalton can you do that please.

The self-published material is not at all self-serving as Mr Smith makes his book available as a free download on the internet.

Mr Smith makes absolutely no claims about third parties. Mr Smith does not involve claims about events not directly related to the subject. There is absolute certainty that Mr Smith is the author of the work "RealValueAccounting.Com - The next step in our fundamental model of accounting.

So,what do you say Gregalton? It seems that it is only your lack of knowledge in the subject matter that prevents this material from appearing on Wikipedia.

Gregalton can you put this article in contention please? This is a formal request.

Gregalton I think you must give other people who understand a little more than you about accounting a chance to decide on the material Mr Smith originally submitted and that you reverted.

Chimbwidz 12:47, 10 July 2007 (UTC)

Gregalton, the material is only contentious because you are not a chartered accountant and do not understand Mr Smith´s work.

Please put this article in contention and let other people who are accountants decide on this matter.