Essay About Common Factors And Rapid Increase

Asset Revaluation and Current Cost Accounting: Uk Corporate Disclosure
Accountants have long disputed whether financial statements should report current
values and the effects of price changes. Indeed, the two kinds of adjustment are often
confused. This study examines the asset revaluation and Current Cost Accounting
(CCA) disclosure decisions of UK firms in 1983, using a costly contracting framework.
We find the two decisions appear to have been taken for very different reasons and to
be largely unrelated, even though the resultant measures overlapped to a non-trivial
degree. The two common factors were that revaluers and CCA disclosers both tended
to be large and to have revalued in the previous two years. Indebtedness was positively
related to revaluation and negatively to CCA disclosure. INTRODUCTION
Countries differ markedly in the extent to which accounting regulations
permit or require companies to report on the effects of changing prices
in their financial statements. In the UK, the Companies Acts have long
permitted companies to make periodic revaluations of fixed assets. The
rapid increase in inflation in the 1970s led to demands that the mixed
reporting of historical costs and current values be replaced or supplemented
by some form of current value or constant price accounting system. This
debate culminated in the introduction of a Current Cost Accounting (CCA)
standard in 1980. The standard