Reporting on Current Replacement Costs

THE SEC, IN ASR 190, HAS REQUIRED THAT CERTAIN REGISTRANTS PROVIDE SUPPLEMENTAL DISCLOSURES OF CURRENT REPLACEMENT COST (CRC) MEASURES OF INVENTORIES, COST OF SALES, CERTAIN PLANT ASSETS, DEPRECIATION, AMORTIZATION, AND DEPLETION. THE SEC'S IDEA IS TO REQUIRE SELECTED CURRENT REPLACEMENT COST DATA W...

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Journal Title: Management Accounting Vol. 59; no. 1; pp. 33 - 35
Author: Wayne Bremser
Format: Article
Language: English
Published: July 1977
Subjects:
Online Access: Full Text
Summary: THE SEC, IN ASR 190, HAS REQUIRED THAT CERTAIN REGISTRANTS PROVIDE SUPPLEMENTAL DISCLOSURES OF CURRENT REPLACEMENT COST (CRC) MEASURES OF INVENTORIES, COST OF SALES, CERTAIN PLANT ASSETS, DEPRECIATION, AMORTIZATION, AND DEPLETION. THE SEC'S IDEA IS TO REQUIRE SELECTED CURRENT REPLACEMENT COST DATA WHICH WOULD REFLECT SOME EFFECTS OF SPECIFIC PRICE CHANGES ON THE REPORTING ENTITY. FASB PROPOSAL CALLS FOR ADJUSTMENTS TO HISTORICAL COST STATEMENTS USING THE GROSS NATIONAL PRODUCT (GNP) IMPLICIT PRICE DEFLATOR, WHICH WOULD RESULT IN AMOUNTS BEING STATED IN PURCHASING POWER UNITS. THE MOST PROMISING LONG RUN SOLUTION SEEMS TO LIE IN REPORTING SOME COMBINATION OF CRC AND CURRENT CASH EQUIVALENTS. THE SEC REQUIREMENT OFFERS A FORMIDABLE CHALLENGE TO MANAGEMENT ACCOUNTANTS, AND THE IMPLEMENTATION PERIOD WILL UNCOVER MANY PROBLEMS THAT MUST BE RESOLVED. EXHIBIT.
ISSN: 0025-1690