The following is the statement of financial position of Fearnot Ltd for the year ending

December 31, 2022 and December 31, 2021.

Statement of Financial Position as at December 31, 2021 and Dec. 31 2022

2022 2021
Non-current Assets
Land 40,000 40,000
Plant and Equipments 50,000 50,000
Acc. Depreciation (10,000)
80,000 90,000

Non-current Assets
Monetary Assets 60,000 30,000
Inventories 24,000 30,000
84,000 60,000
Total Assets 164,000 150,000

Equity and Liabilities

Capital 100,000 100,000
Retained Earnings 14,000
Liabilities - 10% 50,000 50,000
Equity and Liabilities 164,000 150,000
The income statement of Fearnot Ltd for the year ending December 31 2022 is as
follows:
GHC GHC
Sales (5000 units @GHc40) 200,000
Less cost of Goods sold
Opening Inventory (3000 units @ GHc10) 30,000
Purchases (4000units @Ghc12) 48,000
78,000
Closing Inventory (2000 units @GHc12) (24,000)
54,000
Gross Profit 146,000
Expenses:
Interest Expenses 5,000
Selling and Administrative Expenses 117,000
Depreciation 10,000
(132,000)
Net Profit 14,000

1
The following additional information are available:

i. On December 31, 2021 the price-level index was 100. The price-level index as on
December 31, 2022 was 180 and the average price index for 2022 had been 120.
ii. The inventory purchases were made at a date when the price-level index was 150.
iii. All revenues and costs were incurred evenly throughout the year, with the exception of
the cost of goods sold and the depreciation expense.
iv. Depreciation for plant and equipment was accumulated by the straight-line method on
a five-year life.

Required:
a) Determine the gain or loss on holding cash for the year 2022
b) Prepare Fearnot Ltd Income statement for the year ending using Current Purchasing
Power (CPP) method.
c) Prepare Fearnot Ltd Statement of Financial Position as at 2022 using HCA and CPP