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User:Foggy Morning/Notes

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Inflation accounting

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Software example from SAP Inflation accounting

  • Restate G/L accounts and open payables and receivables for inflation (general and specific price-level changes)
  • Revaluate assets, including inventory

Income statement general price-level adjustment (Wolk p.5)

2001 2002 2003 Total
Revenue 33,000 36,302 39,931 109,233
Depreciation 30,000 31,500 (a) 33,000 (b) 94,500
Operating income 3,000 4,802 6,931 14,733
Purchasing power loss - 1,500 (c) 3,000 (d) 4,500
Net income 3,000 3,302 3,931 10,233
(a) 30,000 x 105/100 = 31,500
(b) 30,000 x 110/100 = 33,000
(c) (30,000 x 105/100) - 30,000 = 1,500
(d) (63,000 x 110/105) - 63,000 = 3,000