Forums
Back
Chapter 2: Framework for Preparation and Presentation of Financial Statements
Accountancy
Can someone explain the difference between Financial Capital Maintenance at current purchasing power and Physical Capital Maintenance ? And Rs.14400 was arrived in Illu:5
Answers (1)
You need to consider inflation to arrive at financial capital maintenance Illustration 5 is a continuation of Illustration 4 The average price indices (inflation) given are 100 and 120 i.e. 20% increase So 12000*120%=14400 Physical capital maintenance considers the current market costs
Your Reply