Alpha limited commenced business on 1January 2022 with a single item of inventory costing £120,000. During the year it sold the item for £180,000 in cash. Total inflation was 10% but the item specific inflation was 12%. Calculate the profit on the basis of each concept of capital maintenance and demonstrate the impact on the Equity of the Company.
Alpha limited commenced business on 1January 2022 with a single item of inventory costing £120,000. During the year it sold the item for £180,000 in cash. Total inflation was 10% but the item specific inflation was 12%. Calculate the profit on the basis of each concept of capital maintenance and demonstrate the impact on the Equity of the Company.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Alpha limited commenced business on 1January 2022 with a single item of
inventory costing £120,000. During the year it sold the item for £180,000 in cash.
Total inflation was 10% but the item specific inflation was 12%. Calculate the profit
on the basis of each concept of capital maintenance and demonstrate the impact
on the Equity of the Company.
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