Inflation Accounting

Under this system, costs are assessed in a different [unclear: w or] example, if they are assets [unclear: which contro] to the continuing activity of the business, then the cost is whatit would now cost to replace the asset. If they are not essential then they should be valued at their "net realisable value"—i. e. what they could now be sold for.

Depreciation (the charge made against revenue for the use of an asset over a year on a fixed rate basis) would then be charged against the "revalued" worth of the asset. This would mean that the company would have to pay less tax, because "profit" as it is now measured will be lower.

Stocks which are held by a business would be valued not at what was actually paid for them, but at the current price. When these stocks are sold they will show a smaller profit margin than was actually earned. Once again, profits appear to fall, taxes fall, and the company is able to ask price control authorities to allow them to charge higher prices to consumers.

Monetary assets which the business owns would be revalued in terms of their current purchasing power.