SSAP 16 and Capital Maintenance Available to Purchase

After more than five years debate Statement of Standard Accounting Practice No. 16 (SSAP 16) brought current cost accounting (CCA) into the annual financial reports of most large businesses. This debate may have allowed many of the ideas contained in CCA to enjoy widespread familiarity and even acceptance, but when introducing a standard as far reaching as SSAP 16, it is important to ensure that the concepts on which it is based are clearly understood. Unfortunately, despite the considerable discussion on SSAP 16, there are still important implicit concepts which have not been clarified adequately and so impede understanding. One of the most important concepts in this respect is capital maintenance.