Financial accounting theory 5.2 List some of the criticisms that can be made of historical cost accounting when it is applied in times of rising prices. 5.3 Why do you think that corporate management might prefer to be allowed to use historical costs rather than being required to value assets on the basis of current values? 5.5 What is the 'additivity' problem that Chambers refers to? 5.7 In current purchasing power accounting: (a) Why is it necessary to consider monetary assets separately from non-monetary assets? (b) Why will holding monetary assets lead to a purchasing power loss, but holding non-monetary assets not lead to a purchasing power loss?
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