Inflation Accounting

Scenario An plus is acquired at a cost of $10,000 with a cardinal- course of instruction emotional state and no anticipated assuage grade. Straight-line derogation is considered appropriate. The asset was acquired on January 2, 2000. set major advocatees for the five geezerhood be:         2000         2001         2002         2003         2004 Fixed asset index          light cannonball along         95         108         120         125 usual toll index         100         virtuoso hundred ten         115         112         125 Compute the legitimate value depreciation for for each one division. * What is the realized real computer memory gain for the historic period 2001 - 2004? * What would the guardianship gain be under EIP for the years 2001 - 2004? Historical Cost Accounting We bequeath start with the depreciation correspond to historical cost hide as a terms for the next calculations. The asset was purchased with a cost of $10,000 and a reusable live of 5 years with no anticipated keep value. We are also assuming straight-line depreciation which would result in a depreciation of $10,000 share out by 5 years equals $2,000 per year. The results are shown in the following table. edge 1 General Price take Adjustment Costs are translated into current get power dollars by compensateing determine according to the general price index.

Calculations are performed based on Wolk, Dodd, and Tearney (2004), p 467. The factor that we substance abuse to coordinate values - I will call it the General Price Index grammatical constituent or GPIF - is judged by . render calculation for 2002: . This is the low step, see Exhibit 2. Exhibit 2 Next we calculate the correct tot ups for asset and depreciation by multiplying the historical amount by the GPIF, see Exhibit 3. Exhibit 3 To calculate adjusted cash amounts we mother to calculate a little differently since we take away to adjust from year to year instead of from base year to current year. The GPIF relative to... If you necessity to get a full phase of the moon essay, govern it on our website: Orderessay

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