On January 1, 20X8, Nutley Corporation had monetary assets of P2,000,000 and monetary liabilities of P1,000,000. During 20X8, Nutley’s monetary inflows and outflows were relatively constant and equal so that it ended the year with net monetary assets of P1,000,000. Assume that the comsumer price index was 200 on January 1, 20X8, and 220 on December 31, 20X8. In end of year constant pesos, what is Nutley’s purchasing power gain or loss on net monetary items for 20X8? 0 b. 50,000 gain c. 100,000 gain d. 100,000 loss
On January 1, 20X8, Nutley Corporation had monetary assets of P2,000,000 and monetary liabilities of P1,000,000. During 20X8, Nutley’s monetary inflows and outflows were relatively constant and equal so that it ended the year with net monetary assets of P1,000,000. Assume that the comsumer price index was 200 on January 1, 20X8, and 220 on December 31, 20X8. In end of year constant pesos, what is Nutley’s purchasing power gain or loss on net monetary items for 20X8? 0 b. 50,000 gain c. 100,000 gain d. 100,000 loss
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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- On January 1, 20X8, Nutley Corporation had monetary assets of P2,000,000 and monetary liabilities of P1,000,000. During 20X8, Nutley’s monetary inflows and outflows were relatively constant and equal so that it ended the year with net monetary assets of P1,000,000. Assume that the comsumer price index was 200 on January 1, 20X8, and 220 on December 31, 20X8. In end of year constant pesos, what is Nutley’s
purchasing power gain or loss on net monetary items for 20X8? - 0
b. 50,000 gain
c. 100,000 gain
d. 100,000 loss
8. At both the beginning and end of the year, Lang Co.’s monetary assets exceeded monetary liabilities by P3,000,000. On January 1, the general price level was 125. On December 31, the general price level was 150. How much was Lang’s purchasing power on net monetary itmes during the year?
a. 0
b. 600,000
c. 750,000
d. 1,125,000
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