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    Inflation Accounting, Economic Consequences of SFAS No. 87

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    1-What type of inflation accounting do you favor under high inflationary periods?

    2-Do you think tax allocation can improve the prediction of future tax payments in the short run?

    3-What are the economic consequences of SFAS No. 87?

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    © BrainMass Inc. brainmass.com October 10, 2019, 12:39 am ad1c9bdddf
    https://brainmass.com/business/accounting/inflation-accounting-economic-consequences-sfas-no-87-300691

    Solution Preview

    The response addresses the queries posted in 621 words with references.
    //The inflation has become a common phenomenon for the entire world. In the inflationary situation, to support the recording of transactions, the inflation accounting is a good tool. On the other hand, the SFAS 87 provides significant guideline in the accounting. Here, we will discuss about inflationary accounting and tax allocation.//

    Ans. 1

    Inflation is an important phenomenon which is needed to be explained in proper manner. Several types of inflation occur in the economy but at the time of high inflationary period, specific kind of inflation is required. Inflation accounting is playing a vital role in the present scenario because it has been seen from time to time in economy.

    Value of historic cost has been adjusted on the basis of price index, which is implemented for knowing the current purchasing power of the concerned company. An important kind of inflation is hyper inflationary situation. Its financial statement on the basis of ...

    Solution Summary

    The response addresses the queries posted in 621 words with references.

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