International Finance and Accounting Handbook

(avery) #1
20 • 19

Inflation Corrected Amounts


Historical Amounts

Assuming a 25% Rate of Inflation

Balance Sheet

1/1/X5

12/31/X5

12/31/X5

Current assets

R$ 150

R$ 450

Current assets

R$

450

Permanent assets

1,600

1,600

Permanent assets

2,000

a

Provision for Depreciation

(200)

(200)

Provision for

Depreciation

(300)

Monetary correction

(75)

b

Correction of historical Charge to P&L

(25)

c

(400)

________

________

_____

_________

Total

R$ 1,550

R$ 1,750

Total

R$ 2,050

________

________

_________

________

________

_________

Current liabilities

R$

50

R$

50

Current liabilities

R$

50

Long-term debt

400

400

Long-term debt

400

Equity:

Equity

Capital

800

800

Capital

800

Capital reserve

200

d

Reserves

300

300

Reserves

375

e

Profit of period

200

Profit of period

225

________

________

_________

Total

R$ 1,550

R$ 1,750

Total

R$ 2,050

________

________

_________

________

________

_________

Exhibit 20.10.

Brazilian Example of Inflation Adjustments.

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