Historical Cost and Price-Level Accounting: A Study for Brazilian Companies

Abstract

I am trying, in this paper, to compare historical cost to price-level accounting information in Brazilian companies back in 1999. In the past, Brazilian accounting developed complex treatment for financial reports in inflationary times. Now, when the economy is stable, this paper discusses if Brazilian accounting needs price-level accounting. For this, I use three basic pieces of information: net income, equity and return-on-equity. The data refer to the 500 largest Brazilian companies. I use different statistics and, in general, there is a strong relationship between historical cost and price-level accounting.