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."