Holding gain in general purchasing power terms


Assume that Costa, PLC buys a machine in 2003 for $200,000 when the general price index is 150. At the end of 2006, the index has risen to 210 and the current cost of the machine is $300,000. What would be the unrealized holding gain in general purchasing power terms?

a. $100,000

b. $220,000

c. $120,000

d. $80,000

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Accounting Basics: Holding gain in general purchasing power terms
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