Two retail businesses, A and B, run a similar trade from similar shops in similar areas. A
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Two retail businesses, A and B, run a similar trade from similar shops in similar areas. A bought its shop in 1950 for €5000 and B bought its shop in 1990 for €105 000. Both businesses consistently prepare their accounts on historical cost principles and they have identical operating profits. To what extent do the resulting accounts give a true (and fair) representation of the relative performance of the two businesses?
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The two businesses will have different depreciation charges if they depreciate the buildi...View the full answer
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