Fritz Schmidt (1882-1950) and his pioneering work of current value accounting in comparison to Edwards and Bell's theory.

One of the tasks of this paper is to draw attention to Fritz Schmidt and his pioneering work in current value accounting which anticipated essential features of both Edwards and Bell's (1961) work by 40 years, and the current cost legislations and standards of the United Kingdom, the United States, and Canada by roughly six decades. Above all, I am trying to relate Schmidt's work to that of Edwards and Bell, thereby clarifying some misunderstandings that still surround this relationship. Schmidt needs a champion on the North American continent, and I have tried to assume this often misunderstood task. By direct reference to and translations from Schmidt's magnum opus, I attempt to demonstrate that Schmidt's theory possesses the following qualities: (1) It distinguishes clearly between general purchasing power adjustments and current value adjustments. (2) It does eliminate realized holding gains (cost savings) from the operating section, and presents an income concept equivalent to the "Current Operating Profit" of Edwards and Bell. (3) It clearly separates operating gains from holding gains (though rarely endeavors to separate real from fictional holding gains, since it favors the physical capital maintenance basis of income measurement). (4) It applies current costs also to manufacturing operations. (5) It does not fail to deal with the current costs of other inputs, and generally abandons the historical cost basis. [ABSTRACT FROM AUTHOR]