3. CURRENT PURCHASING POWER METHOD
(CPP)
The current purchasing power (CPP) method is also known as general price-level
accounting.
CPP adjusts historical cost based on changes in the general level of prices, as
measured by the general price level index.
The CPP method can be used for a variety of purposes, including evaluating
financial performance and assets over time, understanding the true value of money
in terms of what it can purchase, and tracking inflation trends.
4. CURRENT COST ACCOUNTING METHOD
(CCA)
CCA is the oldest and the most popular method of inflation accounting.
The current cost accounting (CCA) technique is adopted in place of the current
purchasing power (CPP) of replacement cost accounting technique for price level
changes
Financial statements are drawn up on the assumption that the purchasing power of
money is stable over time
The CCA system considers price changes that are relevant to a specific firm or
industry rather than the whole economy.
5. HYBRID METHOD
Three main adjustments to the trading account, calculated on the historical cost
basis before interest, are required to arrive at the current cost operating profit.
These are called the Depreciation Adjustment, Cost of Sales Adjustment, and
Monetary Working Capital Adjustments.
A hybrid method i.e mixture of CPP and CCA method.
