Statement of financial performance for the year ended 31 December 2014

Sales revenue
4,050,000
Less: Cost of sales
Opening inventories
225,000
Purchases
2,700,000
Closing inventories
-270,000
2,655,000
Gross profit
1,395,000
Expenses
Depreciation
Net profit

450,000
126,000
819,000

Statement of financial position as at 31 December 2014

Non-current assets
Property, Plant & Equipment (PPE)
Inventories
Other net current assets
Net Assets

3,888,000
270,000
1,161,000
5,319,000

Share capital (1 shares)

Retained profits
Equity

4,500,000
819,000
5,319,000

1 January 2014
30 June 2014
30 November 2014
31 December 2014

Part B

RPI
200
220
230
240

PPE
200
240
260
300

Inventories
250
270
280
290

Statement of financial performance for the year ended 31 December 2014

Index
Sales revenue
4,050,000
Less: Cost of sales
Opening inventories
225,000
Purchases
2,700,000
Closing inventories
-270,000
2,655,000
Gross profit
1,395,000
Expenses
Depreciation
Net profit
Non-current asset: Unrealised
Inventory: Unrealised
Non-current asset: Realised
Inventory: Realised
Retained profit

450,000
126,000

819,000

4,050,000
1.08
0.96

243,000
2,700,000
-260,357
2,682,643
1,367,357

1.50

450,000
189,000
728,357
1,944,000
9,643
63,000
27,643
2,772,643

Statement of financial position as at 31 December 2014

Non-current assets
Property, Plant & Equipment (PPE)
Inventories
Other net current assets
Net Assets

3,888,000
270,000
1,161,000
5,319,000

Share capital (1 shares)

Retained profits
Equity

4,500,000
819,000
5,319,000

Index
1.50
1.04

5,832,000
3,888,000
1.20
279,643
270,000
1.04
189,000
126,000
1.20
2,682,643
2,655,000
1.09
HCA Cost of Sales stabilised at year-end CPP
CVA Cost of Sales stabilised at year end CPP
Holding gains (NCA & Inventories, real realised and real unrealised) all in the Statement of Financial Performance

5,832,000
279,643
1,161,000
7,272,643
4,500,000
2,772,643
7,272,643

Part C

Non-current asset: Real Unrealised

Inventory: Real Unrealised
Non-current asset: Real Realised
Inventory: Real Realised
Notes for Inventory - Real Realised

1,166,400
-2,096
37,800
30,156

Part A

FSCVA Fully Stabilised Current Value Accounting (CVA/CPP in combination) would indicate whether the company's financial
capital (shareholder's funds) is maintained in real terms. The basic approach is to restate CVA accounts into Current
Purchasing Power (CPP).

Advantages
Main advantage is to overcome limitations of CPP (which only deals with general price rises) or
CVA (which only deals with specific price rises). The reality is often that both are occuring at the same time
For example, any holding gains on assets under CVA may be fictitious since, although it may be a money gain, it may
not actually be a real gain in a period of high inflation.
Disadvantages
High complexity - significant uncertainty already exist with either CVA or CPP assumptions, let alone both combined
Individual problems of CVA / Replacement Cost (any of below will do)
Problematic for assets with no liquid markets to assess value
Problems of aggregation
Replacement cost is a 'cost' and not a value
Individual problems of CPP (any of below will do)
Still based on Historic Cost Accounting (HCA) rather than current values
Problems interpreting figures (unit CPP is not the same as )
Companies have to have monetary working capital and thus will always report
purchasing power losses on those