1. Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan 5-1 MEASUREMENT APPROACHES AND ACCOUNTING STANDARDS Chapter 5-B

2. 5-2 Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan Professional support for various approaches Current purchasing power accounting generally supported by standard-setters from 1960s to mid- 1970s From about 1975 preference shifted to current cost accounting Late 1970s and early 1980s standard-setters issued recommendations which favoured a mixture of CPPA and CCA From mid-1980s support waned (time of falling inflation)

3. 5-3 Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan Potential reasons for lack of continued support May question the relevance of current cost information in times of falling inflation Drastic change to accounting conventions could cause disruption and confusion in capital markets New method of accounting could have taxation consequences

4. 5-4 Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan Potential reasons for lack of continued support (cont.) Self-interest motives of corporations Limited relevance to decision makers Nevertheless, in recent years there have been movements towards the use of ‘fair values’ as new accounting standards are being released

5. ACCOUNTING STANDARDS DISCUSS THE INTERNATIONAL ACCOUNTING STANDARDS 5-5 Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan