Accounting History: The Age of Excess

"Class, the question was: What was the accounting change in the early 21st century that ended the so called Age of Excess? The computer has normalized your answers. Computer?"

Computer - The answers:

  • To recognize the cost of resource depletion as an expense. 64%
  • To stop treating the planet as being a limitless source of energy. 22%
  • To add the societal costs of living as a social tax to corporate and personal expenditures. 13%
  • To stop the stupidity. 1%

"Excellent, class. Bryyan, please stop hacking meGGan's console. Perhaps you would like to tell the class in your own words, how you would explain to a non-accountant from the late 20th century what the problem was?"

"Umm . . . ah . . . It was just stupid what they were doing."

"Hmm, Bryyan. I think you will need to sharpen your communication skills. Anyone else? . . . Alycya?"

"I would say, 'If you think of the world as your house and you were selling it off brick by brick, it's a mistake to think of those sales as revenue. In reality, you are spending your capital.'"

"Good, Alycya. So, would you recognize a gain or a loss on that sale? Let's let someone else input their answer. Jorgan?"

"Like Alycya said, it's obviously a loss."

"Wait a second, Jorgan. The concept of the Global Resource Depletion Expense or GReDE, was not created until 2020. In the accounting of those days, it would be a profit and a big one at that."

"That sucks. No wonder they pulled as much out of the ground as they could!"

"Right again, Jorgan. But think for a moment. Why was that a bad thing? OK Alycya, you don't have to keep pushing the facilitator button. I know you're keen. Go ahead."

"Their technology was ancient. We can extract a lot more energy from the same resources now than they could then."

"OK Alycya, but can you give me proof that a late 20th century accountant would accept? . . . No? . . . Anyone? . . . Maxx, you're a 20th century technology fan. Anything to add?"

"Well, if you look at cars from the 1950's compared to cars in the 2000's, you can see that they got a lot more power out of a smaller amount of fuel."

"Excellent. OK class, when we meet tomorrow be prepared to discuss the GReDE calculations and how they were affected by IFRS. Class dismissed."

This blog

by Bill Kennedy, CA.IT, PMP - With over 25 years of accounting experience, Bill has a varied background in accounting management and accounting systems implementation, with a focus on the charitable sector. He is also an experienced volunteer board member and fundraiser.

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