Intermediate Accounting 14th Edition

Published by Wiley
ISBN 10: 0470587237
ISBN 13: 978-0-47058-723-2

Chapter 2 - Conceptual Framework for Financial Reporting - Exercises - Page 74: E2-9d

Answer

Inappropriate journal entry. In accounting, we don’t acknowledge price-level adjustments.

Work Step by Step

By making price-level adjustments, this entry deviates from the cost principle. In accounting, assets are not depreciated in terms of variation in their fair value but on expired costs against revenue.
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