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March 18, 2026The Accounting Review

Asset Valuation, Income Determination and Changing Prices.

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Authors

RPRussell J. PetersenBrigham Young UniversityTKThomas F. KellerDuke University

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Implication

This article reveals how adjusting for price-level changes impacts asset valuation, indicating significant valuation differences.

Key Points

  • The aim is to explore how general price-level adjustments can lead to differences in asset valuation compared to historical cost.
  • Discussion of two cases presented by Professor Harold Bierman.
  • Application of discounted cash flow analysis to estimate value.
  • Examination of annuity depreciation methods.
  • Significant differences in net value are noted when price-level changes are ignored.
  • Correctly predicting price-level changes enhances asset valuation estimates.
  • Cash flows are assumed to be highly correlated with price-level movements.

Cite This Study

Petersen et al. (1972) studied this question.

synapsesocial.com/papers/69ba431a4e9516ffd37a4056https://doi.org/10.2308/tar-4490489
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Also Consider

Synapse has enriched 5 closely related papers on similar clinical questions. Consider them for comparative context:

  1. 1Discounted Cash Flows, Price- Level Adjustments and Expectations: A Comment.1972
  2. 2Discounted Cash Flows, Price Level Adjustments and Expectations: A Comment.1972
  3. 3Discounted Cash Flows, Price Level Adjustments and Expectations.1971
  4. 4Expected and Unexpected Price Level Changes.1971
  5. 5ADJUSTMENT OF FIXED ASSETS TO REFLECT PRICE LEVEL CHANGES.1954