What are the Strength and weakness Continuously contemporary accounting?

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Some strengths of Continuously Contemporary Accounting would

include:

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· CoCoA provides information about an entity's capacity to adapt.

Chambers considers such information crucial for effective decision

making

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· It solves the 'additivity' problem-there is a common basis of

valuation (net-market values) so it makes logical sense to add the

various asset values together.

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· There is no need for arbitrary cost allocations through

depreciation.

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Some weaknesses of Continuously Contemporary Accounting would

include:

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· Not all assets will have a readily determined market price-hence

a deal of subjectively will be involved.

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· Some assets can generate income within a particular entity, but

have little or no value to anybody else (for example, the case of

the blast furnace). The 'value in use' of such assets is

ignored.

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· It values assets on the basis of the separate disposal of the

respective assets. The implication of this is that assets which

cannot be separately sold are deemed to have no value-for example,

goodwill. This attribute of CoCoA has attracted a great deal of

criticism.

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· CoCoA has never had widespread acceptance within the business

community and hence there would be numerous obstacles to its

implementation.

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· Because CoCoA would represent a radical departure from current

methods of accounting, its adoption could cause major social and

economic implications.

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· People are used to preparing and reading historical cost

accounting reports, hence there would be a need to re-educate them

about the strengths and limitations of CoCoA-this might be

costly.

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· If an entity does not expect to sell an asset, it is questionable

whether the selling price is really that relevant.

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· Tied to the above point, valuing all assets on the basis of

selling prices has been criticised if it is considered that the

entity is a going concern.

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· Determining the market price of unique assets introduces a degree

of subjectivity into the accounting process.