Residents of a small nation, Paulastan, idolize the TV show American Idol. All they produce and consume are karaoke machines and CDs. The chart below shows the price and quantity of each good sold in 2015 and 2016. Karaoke Machines CDs
Quanriry Price Quantity Price
2015 10 $40 30 $10
2016 12 $60 50 $12

Required:
a. Using a method similar to GDP deflator, compute the percentage change in the overall price level. Use 2015 as the base year.
b. Using a method similar to the consumer price index, compute the percentage change in the overall price level. Also, use 2015 as the base year and fix the basket at 1 karaoke machine and 3 CDs.
c. Is the inflation rate in 2016 the same using the two methods? Explain why or why not.

Flounder supply company, a newly formed corporation, incurred the following expenditures related to land, to buildings, and to machinery and equipment. abstract company’s fee for title search $1,066 architect’s fees 6,499 cash paid for land and dilapidated building thereon 178,350 removal of old building $41,000 less: salvage 11,275 29,725 interest on short-term loans during construction 15,170 excavation before construction for basement 38,950 machinery purchased (subject to 2% cash discount, which was not taken) 112,750 freight on machinery purchased 2,747 storage charges on machinery, necessitated by noncompletion of building when machinery was delivered 4,469 new building constructed (building construction took 6 months from date of purchase of land and old building) 994,250 assessment by city for drainage project 3,280 hauling charges for delivery of machinery from storage to new building 1,271 installation of machinery 4,100 trees, shrubs, and other landscaping after completion of building (permanent in nature) 11,070 instructions determine the amounts that should be debited to land, to buildings,and to machinery and equipment. assume the benefits of capitalizing interest during constructionexceed the cost of implementation. indicate how any costs notdebited to these accounts should be recorded.