Definition of constant dollar accounting

method of measuring financial statement items in dollars of the same (constant) purchasing power. Historical cost is restated in units of constant purchasing power as follows:

Restating all accounts in constant dollars provides greater comparability among years because all assets appear in the same current year average dollars regardless of when the asset was bought. Constant dollar accounting also aids comparability among competing companies in the same industry because each company converts its accounts to the same Consumer Price Index (CPI)dollars.