SA accountants unknowingly destroy the real value of existing reported constant items never maintained during low inflation when they implement their very destructive stable measuring unit assumption as part of the real value destroying traditional Historical Cost Accounting model.
100% of the inflation-adjusted original real value of all contributions to Issued Share Capital and Share Premium Account values have to be invested in revaluable variable item fixed assets with an equivalent maintained fair value (revalued or with unrecorded hidden holding gains) during low inflation in order for SA accountants not to destroy these item’s original real values at a rate equal to the rate of inflation under the real value destroying traditional HCA model when they implement their very destructive stable measuring unit assumption.
Very few companies in SA abide by the 100% of Issued Share Capital and Share Premium invested in fixed assets rule.
There is no unnecessary real value destruction by SA accountants in Issued Share Capital and Share Premium Account values not backed by 100% investment in revaluable fixed assets when they measure financial capital maintenance in units of constant purchasing power as authorized by the IASB in the Framework, Par. 104 (a) in 1989: the constant real value of Issued Share Capital and Share Premium Account values would be maintained even with no fixed assets in SA companies - that always at least break even - when SA accountants measure financial capital maintenance in units of constant purchasing power; i.e. when they abandon their very destructive stable measuring unit assumption.
Kindest regards,
Nicolaas Smith
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