Majikstan Enterprises has equipment on its books that it acquired at the start of 2009. The equipment

Question:

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 . 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:
12/31/10 ...... 30,000
Average ...... 32,900
12/31/11 ...... 36,000
Required:
Using this information, calculate the increse in the current cost of Majikstan Enterprise’s equipment, net of inflation.

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...