The SEC rules historical cost accounting: 1934 to the 1970s

Abstract

From its founding in 1934 until 1972 the SEC, and especially its chief accountant, disapproved of most upward revaluations and general price-level restatements of fixed assets as well as depreciation charges based thereon. This article is a historical study of the evolution of the SEC's policy on upward revaluations and restatements of non-financial assets. It treats episodes prior to 1972 when the private-sector bodies that established accounting principles sought to gain a degree of acceptance for such revaluations and restatements but were consistently rebuffed by the SEC. The SEC reversed its policy on upward revaluations during the period from 1972 to the end of the 1970s. Throughout the article, the author endeavours to explain the factors that influenced the successive positions taken by the SEC.