A dollar adjusted for inflation. If an asset such as land was purchased for $10,000 many years ago when the consumer price index (CPI) was 100 and today the CPI is 400, today’s constant-dollar amount would be $40,000. However, generally accepted accounting principles (specifically the monetary unit assumption) assumes that the CPI is unchanging. Therefore the land will be reported at its original, unadjusted amount of $10,000.
Join PRO or PRO Plus and Get Lifetime Access to Our Premium Materials
Read all 2,866 reviewsFeatures
PRO
PRO Plus
For the past 52 years, Harold Averkamp (CPA, MBA) has
worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.
Read 2,866 Testimonials
