According to the July 12, 2026, Consumer Price Index Release from the U.S. Bureau of Labor Statistics, the 12-month inflation rate rose by 3.4 percent, and the month-over-month measure rose by 0.1 percent in July 2026 compared to June 2026. With inflation higher than normal over the past few years compared to near-term historical averages, understanding how inflation is accounted for is essential for companies to interpret it properly.
Defining Inflation & Accounting Needs
This reporting technique adjusts a business’ financial statements that accounts for inflation-related price changes. By adjusting for a price index, it updates financial statements to show a business’s true financial position and ensure consistency over time.
Whether it’s inflation or deflation, this type of accounting is used during periods of significant price fluctuations. It’s especially important for publicly traded, multinational corporations and how they report their finances since investors look at their performance on a quarter-over-quarter and year-over-year basis.
There are two primary methods: current purchasing power (CPP) and current cost accounting (CCA). CPP looks at monetary and nonmonetary items as separate spheres. Examples of monetary assets include cash, investments, accounts and notes receivable – essentially an asset that can be turned into a determinable monetary figure. Non-monetary assets can take the form of tangible assets like those in a business’ property, plant or equipment line item. Intellectual property and goodwill are other examples of non-monetary assets.
While nonmonetary items are indexed based upon a metric such as the Consumer Price Index (CPI), with the CPP method using historical costs as the baseline numbers, monetary items are evaluated to see what value the items may have gained or lost during the period analyzed.
CCA analyzes asset values at their fair market value, not their historical cost or the price paid for assets when originally reported. The following example illustrates how the CPP model calculates it:
A company bought equipment in 2010 for $15,000 based upon a price index of 200, and in 2026 the established price index rose to 400. Based on taking the new price index of 400, divided by the previous price index of 200 (400/200 = 2), the original purchase price of $15,000 is to be multiplied by the conversion factor of 2 = $15,000 x 2 = $30,000.
When the company goes to account for it on their financial statements, it would be recorded on its balance sheet on the line item “closing equipment balance” for the $30,000.
Why Restating Financial Statements is Important
It’s important to ensure a business’ historical information is relevant, along with their financial statements providing internal and external audiences an accurate perspective of what inflation and deflation do. During periods of high inflation or deflation, if the data is not indexed accordingly, it’s inaccurate. The primary benefit is that business’ income and expenses are represented and comparable with other companies and historical information.
While each business and its asset inventory is different, understanding how deflation and inflation impact businesses is an important consideration for daily operations and external audiences who may lend or invest in a company.
Alan F Burke CPA
Understanding Inflation Accounting
September 1, 2026 · Blog, General Business News
⏱ 3 min read
According to the July 12, 2026, Consumer Price Index Release from the U.S. Bureau of Labor Statistics, the 12-month inflation rate rose by 3.4 percent, and the month-over-month measure rose by 0.1 percent in July 2026 compared to June 2026. With inflation higher than normal over the past few years compared to near-term historical averages, understanding how inflation is accounted for is essential for companies to interpret it properly.
Defining Inflation & Accounting Needs
This reporting technique adjusts a business’ financial statements that accounts for inflation-related price changes. By adjusting for a price index, it updates financial statements to show a business’s true financial position and ensure consistency over time.
Whether it’s inflation or deflation, this type of accounting is used during periods of significant price fluctuations. It’s especially important for publicly traded, multinational corporations and how they report their finances since investors look at their performance on a quarter-over-quarter and year-over-year basis.
There are two primary methods: current purchasing power (CPP) and current cost accounting (CCA). CPP looks at monetary and nonmonetary items as separate spheres. Examples of monetary assets include cash, investments, accounts and notes receivable – essentially an asset that can be turned into a determinable monetary figure. Non-monetary assets can take the form of tangible assets like those in a business’ property, plant or equipment line item. Intellectual property and goodwill are other examples of non-monetary assets.
While nonmonetary items are indexed based upon a metric such as the Consumer Price Index (CPI), with the CPP method using historical costs as the baseline numbers, monetary items are evaluated to see what value the items may have gained or lost during the period analyzed.
CCA analyzes asset values at their fair market value, not their historical cost or the price paid for assets when originally reported. The following example illustrates how the CPP model calculates it:
A company bought equipment in 2010 for $15,000 based upon a price index of 200, and in 2026 the established price index rose to 400. Based on taking the new price index of 400, divided by the previous price index of 200 (400/200 = 2), the original purchase price of $15,000 is to be multiplied by the conversion factor of 2 = $15,000 x 2 = $30,000.
When the company goes to account for it on their financial statements, it would be recorded on its balance sheet on the line item “closing equipment balance” for the $30,000.
Why Restating Financial Statements is Important
It’s important to ensure a business’ historical information is relevant, along with their financial statements providing internal and external audiences an accurate perspective of what inflation and deflation do. During periods of high inflation or deflation, if the data is not indexed accordingly, it’s inaccurate. The primary benefit is that business’ income and expenses are represented and comparable with other companies and historical information.
While each business and its asset inventory is different, understanding how deflation and inflation impact businesses is an important consideration for daily operations and external audiences who may lend or invest in a company.
Disclaimer
These articles provide general information on tax, accounting, and financial topics for small businesses and individuals. They are educational in nature and are not specific legal, accounting, financial, tax, or other professional advice, and should not be relied upon as such. This content was prepared by Service2Client and may have been reviewed or edited by the website owner for accuracy and compliance. Look for a trust mark below for verification details. No representation is made that any approach described will achieve a particular result, and no regulatory or professional body has reviewed or endorsed this content. Because each situation is different, readers should consult a qualified professional about their specific circumstances before acting. Images accompanying these articles are protected by copyright and may not be copied or reused.
Picture two couples, each with a baby born this year, each routing $2,500 of salary into that child’s Trump Account through an employer’s payroll system. One couple sits in the 35% bracket. The other, at roughly $65,000 of taxable income, is in the 12% bracket. Both contributions escape federal income tax. The first couple’s bill shrinks by $875. The second couple’s bill shrinks by $300. Same account, same dollars, nearly three times the benefit for the household that needed it less.
That arithmetic is the quiet story inside what has been presented as a workplace convenience.
Congress Built the Benefit – The IRS Just Wrote the Manual
The One Big Beautiful Bill Act already let employers put up to $2,500 a year into an employee’s or a dependent’s Trump Account without adding to the worker’s income, and it already allowed a company to run that contribution through a Section 125 cafeteria plan so the employee funds a child’s account out of pre-tax salary. Employers could begin on July 4, 2026. What Treasury and the IRS published on Aug. 11 is the operating manual: how to structure the program, how nondiscrimination testing works, and a safe harbor for companies that want to match the government’s $1,000.
The Break Stops at the Income Tax Line
It is easy to overstate what “pre-tax” buys here. The exclusion applies to federal income tax only. The money stays wages for Social Security, Medicare, and unemployment tax purposes. So, the savings amount to nothing more than the sum deferred multiplied by the filer’s top income tax rate, which is precisely why $2,500 is worth $875 to a 35% taxpayer and $300 to a 12% taxpayer.
Postponed for Decades, Not Years
Nor is the tax forgiven. Nothing can be withdrawn throughout the rule’s growth period, which runs until January 1 of the year the child turns 18. From that date, the account behaves like any other traditional IRA, meaning a 10% additional tax on distributions taken before age 59½ unless an exception applies, on top of ordinary income tax. The realistic horizon is four decades or more, not the college fund some families picture.
On the basics: Trump Accounts, Section 530A of the code, came out of last year’s OBBBA. A child who is a U.S. citizen born from 2025 through 2028 can receive a one-time $1,000 federal deposit, though it is not automatic. A parent has to open the account and elect the deposit on Form 4547, and the child needs a Social Security number. Contributions from all sources top out at $5,000 a year at current levels, indexed for inflation after 2027. The money must sit in a fund tracking a broad index of mostly U.S. stocks, with no leverage and fees capped at a tenth of a percent.
Taxation on the way out follows the money’s path in. Dollars contributed with after-tax income create basis and come back untaxed. Everything else, meaning the federal $1,000, employer contributions, pre-tax payroll elections and all investment earnings, is ordinary income when withdrawn.
Not Every Parent Will Get the Chance
Access tilts the same direction. Mercer surveyed close to 350 employers in April and found roughly 4% expecting to launch a contribution program in 2026 or 2027, with about two-thirds ruling it out. Adoption skews toward large firms with real benefits infrastructure, the same employers already offering generous 401(k) matches. A parent at a small company may never see the option. Anyone self-employed is excluded by rule: partners, sole proprietors, and more-than-2% S corporation shareholders cannot make the pre-tax election even if their own company sponsors a program for its common-law employees.
There is a planning burden, too. Households with finite savings already ration dollars across retirement accounts, 529 plans and emergency reserves. A pre-tax Trump Account election adds another comparison, and the families most likely to get it right are the ones who can afford advice.
Conclusion
The regulations are proposals. Written comments close Sept. 25, and a hearing is set for Oct. 15, so the final text could shift. Employers may rely on the proposed rules in the meantime. What is unlikely to shift is the underlying arithmetic. The $1,000 from Treasury lands identically in every eligible child’s account. The pre-tax payroll option does not, and its value climbs with the parent’s bracket.
Alan F Burke CPA
New Trump Account Updates
September 1, 2026 · Blog, Tax and Financial News
⏱ 4 min read
Picture two couples, each with a baby born this year, each routing $2,500 of salary into that child’s Trump Account through an employer’s payroll system. One couple sits in the 35% bracket. The other, at roughly $65,000 of taxable income, is in the 12% bracket. Both contributions escape federal income tax. The first couple’s bill shrinks by $875. The second couple’s bill shrinks by $300. Same account, same dollars, nearly three times the benefit for the household that needed it less.
That arithmetic is the quiet story inside what has been presented as a workplace convenience.
Congress Built the Benefit – The IRS Just Wrote the Manual
The One Big Beautiful Bill Act already let employers put up to $2,500 a year into an employee’s or a dependent’s Trump Account without adding to the worker’s income, and it already allowed a company to run that contribution through a Section 125 cafeteria plan so the employee funds a child’s account out of pre-tax salary. Employers could begin on July 4, 2026. What Treasury and the IRS published on Aug. 11 is the operating manual: how to structure the program, how nondiscrimination testing works, and a safe harbor for companies that want to match the government’s $1,000.
The Break Stops at the Income Tax Line
It is easy to overstate what “pre-tax” buys here. The exclusion applies to federal income tax only. The money stays wages for Social Security, Medicare, and unemployment tax purposes. So, the savings amount to nothing more than the sum deferred multiplied by the filer’s top income tax rate, which is precisely why $2,500 is worth $875 to a 35% taxpayer and $300 to a 12% taxpayer.
Postponed for Decades, Not Years
Nor is the tax forgiven. Nothing can be withdrawn throughout the rule’s growth period, which runs until January 1 of the year the child turns 18. From that date, the account behaves like any other traditional IRA, meaning a 10% additional tax on distributions taken before age 59½ unless an exception applies, on top of ordinary income tax. The realistic horizon is four decades or more, not the college fund some families picture.
On the basics: Trump Accounts, Section 530A of the code, came out of last year’s OBBBA. A child who is a U.S. citizen born from 2025 through 2028 can receive a one-time $1,000 federal deposit, though it is not automatic. A parent has to open the account and elect the deposit on Form 4547, and the child needs a Social Security number. Contributions from all sources top out at $5,000 a year at current levels, indexed for inflation after 2027. The money must sit in a fund tracking a broad index of mostly U.S. stocks, with no leverage and fees capped at a tenth of a percent.
Taxation on the way out follows the money’s path in. Dollars contributed with after-tax income create basis and come back untaxed. Everything else, meaning the federal $1,000, employer contributions, pre-tax payroll elections and all investment earnings, is ordinary income when withdrawn.
Not Every Parent Will Get the Chance
Access tilts the same direction. Mercer surveyed close to 350 employers in April and found roughly 4% expecting to launch a contribution program in 2026 or 2027, with about two-thirds ruling it out. Adoption skews toward large firms with real benefits infrastructure, the same employers already offering generous 401(k) matches. A parent at a small company may never see the option. Anyone self-employed is excluded by rule: partners, sole proprietors, and more-than-2% S corporation shareholders cannot make the pre-tax election even if their own company sponsors a program for its common-law employees.
There is a planning burden, too. Households with finite savings already ration dollars across retirement accounts, 529 plans and emergency reserves. A pre-tax Trump Account election adds another comparison, and the families most likely to get it right are the ones who can afford advice.
Conclusion
The regulations are proposals. Written comments close Sept. 25, and a hearing is set for Oct. 15, so the final text could shift. Employers may rely on the proposed rules in the meantime. What is unlikely to shift is the underlying arithmetic. The $1,000 from Treasury lands identically in every eligible child’s account. The pre-tax payroll option does not, and its value climbs with the parent’s bracket.
Disclaimer
These articles provide general information on tax, accounting, and financial topics for small businesses and individuals. They are educational in nature and are not specific legal, accounting, financial, tax, or other professional advice, and should not be relied upon as such. This content was prepared by Service2Client and may have been reviewed or edited by the website owner for accuracy and compliance. Look for a trust mark below for verification details. No representation is made that any approach described will achieve a particular result, and no regulatory or professional body has reviewed or endorsed this content. Because each situation is different, readers should consult a qualified professional about their specific circumstances before acting. Images accompanying these articles are protected by copyright and may not be copied or reused.
No matter how well you know someone, you usually learn a lot more once you’ve traveled with them. We are all different in this activity, from people who prefer aisle seats over window seats, to Airbnb renters or hotel enthusiasts, to the outdoorsy versus museum aficionados.
Friendship compatibility does not always translate to travel compatibility. Therefore, before you load up the car or board public transportation, it will help to communicate preferences, establish a few ground rules, and, perhaps most importantly, decide how to share expenses.
There are plenty of advantages to traveling with another person or a group of people, even if you tend to be a loner. For example, sharing expenses for accommodations, a car rental, or even a bottle of wine over dinner can cut your vacation budget substantially. However, if you don’t have a plan for what expenses to share and how to track them, you may return home short-changed, resentful, and with one less person in your life.
Ground Rules
It’s important to gauge upfront if everyone is on the same page as to how much money they want to spend on the trip, and even establish a maximum budget so no one gets trapped into paying more than they can afford. This means determining the level of accommodations (e.g., luxury versus budget-friendly) to shop for, whether or not you want the option to cook meals as opposed to eating out all the time, and the main activities the group plans to engage in (e.g., free hiking versus expensive snow skiing). Establish what types of expenses will be shared, such as group meals, housing and car rental, and what will be paid for individually, such as airfare, solo outings and souvenirs.
Choose Your Tracking Method
There are two approaches for sharing the expenses of travel: Wing it or track it. Winging implies a more casual tactic. For example, one person picks up the hotel room tab, another pays for the rental car, another pays for meals. Perhaps you rotate or take turns picking up comparable bills. The goal is to generally spread expenses evenly across all payers, but winging it may lead to one (or more) travelers paying more while the other(s) pay less. If everyone agrees their outlays may differ, then this tactic will probably work just fine.
Tracking Tools
The second approach is to track all shared expenses with some degree of accuracy. This is easier if all expenses are shared evenly, but more complex if expenses need to be broken down into who ordered a salad and who ordered the filet mignon.
Fortunately, there is a plethora of electronic technologies and digital tools designed to make it easier to track travel expenses and ensure no one overpays – right down to the penny.
PayPal, Venmo, Zelle – These services make it easy to send or request money using apps. They may require travelers to keep receipts and calculate individual tabs, then settle up at the end of the day or the end of the trip. This tactic can be a little unwieldy, and may require manual tracking to ensure no one is paying too much or too little along the way. All travelers should sign up for at least one compatible money transfer app; they are generally free to use.
Splitwise – This app enables participants in a travel group to enter the expenses they paid by adding the names of the participants and breaking down the individual amounts each person contributed to each bill. The app tracks expenses by person, then tallies up who owes money at the end. Splitwise calculates who owes whom. Travelers can then settle balances using their preferred payment method, such as PayPal, Venmo, Zelle, bank transfer, cash, or another supported payment service. Splitwise is just one brand name of many apps that work similarly, including Tricount and Revolut.
Cino – This app works a bit differently in that each traveler links it to their personal credit or debit card, and the group Cino card is loaded into Apple Pay or Google Pay. Then all participants share a virtual card to pay for expenses, which divides each payment at the point of purchase among the participants for that expense. When one person pays for an expense, everyone’s share is automatically charged to each member’s connected credit or debit account. Note that Cino does not break down invoices by line item to track exactly who ate what; it follows a split ratio (e.g., 50%-50%) as determined up front by the group.
Artificial Intelligence – Travelers may want to give AI a try, where as they start with a prompt asking the service to track and split group expenses, then enter the names of participants and related expenses to the prompt on an ongoing basis. AI tools can organize, categorize, and calculate shared expenses that users enter manually. Some AI assistants may also summarize spending trends or generate settlement calculations, but they generally do not automatically track purchases unless integrated with financial apps.
Given today’s higher prices, group travel is becoming more prevalent as a way to share the cost of vacation. According to a 2025 Zeta Global survey, 40 percent of travelers are going on trips with family while 21 percent opt to vacation with friends. Today’s new digital tools make it easy to track and share expenses so that you don’t strain relationships with travel companions.
Alan F Burke CPA
Travel Companions: How to Share Expenses
August 1, 2026 · Blog, Financial Planning
⏱ 5 min read
No matter how well you know someone, you usually learn a lot more once you’ve traveled with them. We are all different in this activity, from people who prefer aisle seats over window seats, to Airbnb renters or hotel enthusiasts, to the outdoorsy versus museum aficionados.
Friendship compatibility does not always translate to travel compatibility. Therefore, before you load up the car or board public transportation, it will help to communicate preferences, establish a few ground rules, and, perhaps most importantly, decide how to share expenses.
There are plenty of advantages to traveling with another person or a group of people, even if you tend to be a loner. For example, sharing expenses for accommodations, a car rental, or even a bottle of wine over dinner can cut your vacation budget substantially. However, if you don’t have a plan for what expenses to share and how to track them, you may return home short-changed, resentful, and with one less person in your life.
Ground Rules
It’s important to gauge upfront if everyone is on the same page as to how much money they want to spend on the trip, and even establish a maximum budget so no one gets trapped into paying more than they can afford. This means determining the level of accommodations (e.g., luxury versus budget-friendly) to shop for, whether or not you want the option to cook meals as opposed to eating out all the time, and the main activities the group plans to engage in (e.g., free hiking versus expensive snow skiing). Establish what types of expenses will be shared, such as group meals, housing and car rental, and what will be paid for individually, such as airfare, solo outings and souvenirs.
Choose Your Tracking Method
There are two approaches for sharing the expenses of travel: Wing it or track it. Winging implies a more casual tactic. For example, one person picks up the hotel room tab, another pays for the rental car, another pays for meals. Perhaps you rotate or take turns picking up comparable bills. The goal is to generally spread expenses evenly across all payers, but winging it may lead to one (or more) travelers paying more while the other(s) pay less. If everyone agrees their outlays may differ, then this tactic will probably work just fine.
Tracking Tools
The second approach is to track all shared expenses with some degree of accuracy. This is easier if all expenses are shared evenly, but more complex if expenses need to be broken down into who ordered a salad and who ordered the filet mignon.
Fortunately, there is a plethora of electronic technologies and digital tools designed to make it easier to track travel expenses and ensure no one overpays – right down to the penny.
PayPal, Venmo, Zelle – These services make it easy to send or request money using apps. They may require travelers to keep receipts and calculate individual tabs, then settle up at the end of the day or the end of the trip. This tactic can be a little unwieldy, and may require manual tracking to ensure no one is paying too much or too little along the way. All travelers should sign up for at least one compatible money transfer app; they are generally free to use.
Splitwise – This app enables participants in a travel group to enter the expenses they paid by adding the names of the participants and breaking down the individual amounts each person contributed to each bill. The app tracks expenses by person, then tallies up who owes money at the end. Splitwise calculates who owes whom. Travelers can then settle balances using their preferred payment method, such as PayPal, Venmo, Zelle, bank transfer, cash, or another supported payment service. Splitwise is just one brand name of many apps that work similarly, including Tricount and Revolut.
Cino – This app works a bit differently in that each traveler links it to their personal credit or debit card, and the group Cino card is loaded into Apple Pay or Google Pay. Then all participants share a virtual card to pay for expenses, which divides each payment at the point of purchase among the participants for that expense. When one person pays for an expense, everyone’s share is automatically charged to each member’s connected credit or debit account. Note that Cino does not break down invoices by line item to track exactly who ate what; it follows a split ratio (e.g., 50%-50%) as determined up front by the group.
Artificial Intelligence – Travelers may want to give AI a try, where as they start with a prompt asking the service to track and split group expenses, then enter the names of participants and related expenses to the prompt on an ongoing basis. AI tools can organize, categorize, and calculate shared expenses that users enter manually. Some AI assistants may also summarize spending trends or generate settlement calculations, but they generally do not automatically track purchases unless integrated with financial apps.
Given today’s higher prices, group travel is becoming more prevalent as a way to share the cost of vacation. According to a 2025 Zeta Global survey, 40 percent of travelers are going on trips with family while 21 percent opt to vacation with friends. Today’s new digital tools make it easy to track and share expenses so that you don’t strain relationships with travel companions.
Disclaimer
These articles provide general information on tax, accounting, and financial topics for small businesses and individuals. They are educational in nature and are not specific legal, accounting, financial, tax, or other professional advice, and should not be relied upon as such. This content was prepared by Service2Client and may have been reviewed or edited by the website owner for accuracy and compliance. Look for a trust mark below for verification details. No representation is made that any approach described will achieve a particular result, and no regulatory or professional body has reviewed or endorsed this content. Because each situation is different, readers should consult a qualified professional about their specific circumstances before acting. Images accompanying these articles are protected by copyright and may not be copied or reused.
According to the July 12, 2026, Consumer Price Index Release from the U.S. Bureau of Labor Statistics, the 12-month inflation rate rose by 3.4 percent, and the month-over-month measure rose by 0.1 percent in July 2026 compared to June 2026. With inflation higher than normal over the past few years compared to near-term historical averages, understanding how inflation is accounted for is essential for companies to interpret it properly. 
Picture two couples, each with a baby born this year, each routing $2,500 of salary into that child’s Trump Account through an employer’s payroll system. One couple sits in the 35% bracket. The other, at roughly $65,000 of taxable income, is in the 12% bracket. Both contributions escape federal income tax. The first couple’s bill shrinks by $875. The second couple’s bill shrinks by $300. Same account, same dollars, nearly three times the benefit for the household that needed it less.
No matter how well you know someone, you usually learn a lot more once you’ve traveled with them. We are all different in this activity, from people who prefer aisle seats over window seats, to Airbnb renters or hotel enthusiasts, to the outdoorsy versus museum aficionados.