New IFRS, Half-Way Up to 'The' Profit Formula(R)

21 Pages Posted: 17 May 2005 Last revised: 10 Jun 2016

Date Written: November 16, 2005


The new IFRS (International Financial Reporting Standards) acknowledge value differences in some instances but not in all cases. Moreover, for instance under regulation IAS 16, fundamental mistakes are still allowed or even prescribed, contradictory to logic. It is never correct to enter direct mutations onto the balance sheet regardless of the profit and loss account.

A new equation is available within which the balance sheet, the profit and loss account, and the statement of source and use of funds remain inter-related. The apparent antithesis between nominalism and substantialism has been bridged over. The Profit Formula(R), this basic equation of profit measurement, includes each and every capital maintenance concept and does not exclude a single concept of value. According to all reasonable profit definitions, anybody can measure profit over a randomly chosen period, of any length - quickly and easily. The Profit Formula(R) is exceptionally user-friendly. Working with this profit meter is straightforward and relatively simple. Counting and calculating are reduced to an absolute minimum via a direct way to the outcome. A tremendous amount of money can be saved with regard to administration and fringe costs, including for cases of pure nominalism (measuring fiscal profit).

Keywords: Profit measurement, IAS 16, IAS 12.61, NVA (net value added), value differences, accounting conventions

Suggested Citation

Jacobs, Jan F., New IFRS, Half-Way Up to 'The' Profit Formula(R) (November 16, 2005). Available at SSRN: or

Jan F. Jacobs (Contact Author)

Independent ( email )

Beethovenlaan 36
Enschede, Overijssel 7522 HJ

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