Controversy remains for price change accounting with respect to
I..the gearing adjustment
II..the treatment of gains and losses on monetary items

Question

Quizplus · Accepted Answer

The controversy with price change accounting is related to both the gearing adjustment and the treatment of gains and losses on monetary items. While some argue that gearing adjustments should be made to reflect inflation, others argue that it may not be appropriate as it could distort information about the underlying business. Similarly, the treatment of gains and losses on monetary items can be controversial as it depends on how the accounting standard setter decides to treat inflation. Therefore, both I and II are correct answers.

Controversy Remains for Price Change Accounting with Respect to