Under the physical capital perspective what capital maintenance adjustment would be needed for the following situation? GHI Company purchased 300 units on 1 March for $25 each.On 31 March,GHI sold all the units for $30 each.On this date the current cost of each unit was $29.
A)$1500
B)$1200
C)$9000
D)$300

Question

Quizplus · Accepted Answer

Under the physical capital perspective, the capital maintenance adjustment is calculated by taking the difference between the current cost and the historical cost of the asset. In this situation, the historical cost per unit was $25 and the current cost per unit was $29. Therefore, the capital maintenance adjustment would be $4 per unit. Since GHI Company purchased 300 units, the total adjustment would be $4 x 300 = $1200. Therefore, the correct answer is B.

Under the Physical Capital Perspective What Capital Maintenance Adjustment Would