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 is the unrealized holding gain in current cost terms?

Question

Quizplus · Accepted Answer

The unrealized holding gain in current cost terms is calculated by subtracting the original cost of the machine from its current cost. The original cost is $200,000 and the current cost is $300,000. Therefore, the unrealized holding gain is $300,000 - $200,000 = $100,000.

Assume That Costa Plc Buys a Machine in 2003 for $200,000