THE REVOLUTION IN ACCOUNTING THEORY.
The accounting theory revolution consists essentially of an attempt to overthrow the traditional emphasis on costs in accounting theory and to replace it with a logical structure centered on values. It is hoped that this will provide a basis for resolving major theory controversies and for narrowing the present diversity of accepted practice. The "pure theory" of accounting rests on a definition of resources in terms of economic power of an entity and a definition of income in terms of changes in resources. The ideal measure of resources is current exchange value. This is not the same as either liquidation value or market replacement cost, though these set lower and upper limits, respectively, and can often be used to measure value. When these limits are widely separated, value must be estimated. It is often appropriate to forecast future benefits in making these estimates. The amount expended for an asset is ordinarily a reliable measure of its value at the time of acquisition. In some cases it is impossible to get a reasonable approximation of the value of an asset, though there may be no doubt that some exchange value exists. Such assets are included in the term "goodwill," and are not recorded in the absence of an actual exchange.
- DOI
- 10.2308/tar-7106795
- Volume
- 38 (4)
- Pages
- 696-708
- Language
- en
- Export
- BibTeX
- Sources
- crossref openalex