# index number

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## index number,

in econometrics, a figure reflecting a change in value or quantity as compared with a standard or base. The base usually equals 100 and the index number is usually expressed as a percentage. For example, if a commodity cost twice as much in 1970 as it did in 1960, its index number would be 200 relative to 1960. Index numbers are used especially to compare business activity, the cost of living, and employment; one of the most influential indexes in the United States is the Consumer Price Index (see under cost of livingcost of living,
amount of money needed to buy the goods and services necessary to maintain a specified standard of living. The cost of living is closely tied to rates of inflation and deflation.
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). Index numbers enable economists to reduce unwieldy business data into easily understood terms.

### Bibliography

See R. Marris, Economic Arithmetic (1958); Z. Karabell, The Leading Indicators: A Short History of the Numbers That Rule Our World (2014).

## index number

a measure which shows average changes over a period of time in the price, quantity or value of one, or a collection, of items. The RETAIL PRICE INDEX and the Index of Production are examples of indices that measure a collection (basket) of items. Any series of figures can be put into index form. In a time series the chosen base year is set to 100 and all the changes are calculated relative to that base year. If there is only one variable in the index, this is done by obtaining the ratio of the current value to the base year value and multiplying by 100:

If an index, for example the Index of Average Price of New Dwellings, contains only one variable, the calculation of the Index is straightforward. The construction of composite indices has to take into consideration the choice of items to be included, their availability and reliability he need for weights, and the method of calculation. Most indices are weighted to reflect the relative importance of the various items. A Laspeyres index uses weights fixed in the base year. As time goes on this can make the weighting system unrepresentative. A Paasche index uses weights from the current year. This retains representation but makes comparison more difficult. One technique to overcome lack of representation is to relate the changes in the index to the previous year instead of the base year. This is known as ‘chain basing’. Index numbers can also be re-based, i.e. a more recent year is used for the base year.

## index number

[′in‚deks ‚nəm·bər]
(statistics)
A number indicating change in magnitude, as of cost or of volume of production, as compared with the magnitude at a specified time, usually taken as 100; for example, if production volume in 1970 was two times as much as the volume in 1950 (taken as 100), its index number is 200.
References in periodicals archive ?
Only a single category of mature animals has a base value.
Category Value Total Value Total 98-1 Cows 900 \$1,000 \$1,000 98-2 Cows 900 1,000 1,000 98-3 Cows 900 1,000 1,000 96-1 Cows 900 900 96-2 Cows 900 900 96-3 Cows 900 900 96-4 Cows 900 900 95-1 Cows 900 900 95-2 Cows 900 900 94-1 Cows 900 900 Total 10 head \$9,000 \$9,300 Under the group value approach, the valuation tables would appear as follows for the first and second years, respectively: Group Approach/Single Transfer Point/Long Version/Year 1: Base Value New Base No.
The gain or loss from the sale of culled breeding livestock is the difference between the sale price and the base value of the animals sold.
Under the group value approach, the farm accountant multiples the number of animals sold or died in each category by the base value at the beginning of the year.
Using the group approach and multiple transfer points, the valuation table for breeding livestock presents the following information at the end of the third year: Group Approach/Multiple Transfer Points/Short Version/Year 3/Base Values Unchanged: Base Value New Base No.
BREEDING LIVESTOCK For Each Age Group: number of head number transferred in and transferred out number sold number died base value per head and total base value for raised animals cost and accumulated depreciation for purchased animals market value per head and total market value For the Herd as a Whole: number of head total base value for raised animals total cost and accumulated depreciation for purchased animals total market value, gains and losses on the sale of culled livestock calculations for changes in value due to age progression calculations for changes in value due to changes in base values.
When the base values are changed, Gains/Losses Due to Changes in General Base Values of Breeding Livestock reports these changes on the income statement below Net Farm Income from Operations.
When animals enter the breeding herd and when they move through transfer points, the farm accountant assigns base values appropriate for the age group.
When base values change, the balance sheet and the income statement are affected.
Income statement reports Gains/Losses Due to Changes in General Base Values of Breeding Livestock
Base values should remain the same for several years.
The following example illustrates the assignment of base values using two categories.

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