Majikstan Enterprises has equipment on its books that it acquired at the start of 2009 . The equipment is being depreciated in straight-line fashion over a 10-year period and has no salvage value. The current cost of this equipment at the end of 2010 was MJR8,000,000,000. During 2011 , the specific price index for equipment increased from 100 to 137.5. General price-level index information for the period was as follows:
|
12/31/2010 |
30,000 |
|
Average |
32,900 |
|
12/31/2011 |
36,000 |
Required: Using this information, calculate the increse in the current cost of Majikstan Enterprise’s equipment, net of inflation. 6. Now assume that Majikstan Enterprises is foreign subsidiary of a U.S.-based multinational corporation and that its financial statements are consolidated with those of its U.S. parent. Relevant exchange rate and