Over the years, considerable debate has surrounded the use of the historical cost model and whether it should be replaced by a current cost model to better reflect the concept of physical capital maintenance. The fact that the IFRS Framework and the financial statements of Canadian companies continue to use the historical cost and financial capital maintenance concepts demonstrates that there are good reasons in favor of retaining this basis of financial statement presentation.
Required:
Discuss the reasons why the current cost accounting model has not received general acceptance as a basis for the preparation of financial statements in Canada.