Earned Economic Income—A Theory for Matching

The paper presents a novel ex post income concept, called Earned Economic Income (EEI), which would provide periodic accounting signals that are consistent with those derived from Net Terminal Value (NTV) analyses. EEI assigns interest adjusted NTV to the periods in which it is earned. The allocation is made via the apportionment of interest adjusted original cost. Inflation adjusted and monetary EEI figures are identical, so that the concept provides an integrating framework for interest adjusted inflation accounting and historical cost matching approaches. In developing the model the paper discusses the significance of conceptual models and of Economic Income (EI).