An Empirical Study of Net Assets Disclosure: Inflation Accounting Revisited
20 Pages Posted: 2 Nov 2005
This paper analyzes the differences in methods of calculating and disclosing net assets between Statement of Financial Accounting Standards #33 (FAS33) and other existing current cost and constant dollar methods. Furthermore, this paper provides empirical evidence on the methods employed by a sample of 78 companies that calculate net assets for FAS33 reporting. We found there are many methods being applied to determine net assets. The lack of uniformity reduces the effectiveness of net assets disclosure required by FAS33. This study demonstrates that the Financial Accounting Standards Board should issue statements that are more well-defined and less ambiguous about preferred net asset disclosure methods.
Keywords: Owner's equity, Net assets, FAS 33, Constant dollar method, Current cost method
JEL Classification: M41
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