Three Kinds of Adjustments for Price Changes.

In this article the author examines the challenges encountered by accountants in several countries in establishing principles for making adjustments on price changes. For certain reasons many accountants argue that adjustments should be made to the financial statements in order to take account of the change in prices during a particular period. In the Netherlands adjustments for changes in the replacement cost of assets are recognized by the accounting profession despite the fact that their use is not permitted for taxation purposes. In South American countries the practice of adjusting their corporate financial statements for general price-level changes is becoming accepted as essential.