The finance director of Toy plc has been asked by a shareholder to explain items that appear in the current cost statement of profit or loss for the year ended 31.8.2019 and the statement of financial position as at that date: 

Required:

(a) Explain what each of the items numbered 1–6 represents and the purpose of each. 

(b) What do you consider to be the benefits to users of providing current cost information?

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Historical cost profit Cost of sales adjustment Additional depreciation Monetary working capital adjustment Current cost operating profit before tax Gearing adjustment CCA operating profit Non-current assets at gross replacement cost Accumulated current cost depreciation Net current assets 12% debentures Issued share capital Current cost reserve Retained earnings (1) (2) (3) (4) (5) (6) 10,000 6,000 2,500 428,250 (95,650) 143,000 18,500 124,500 2,600 127,100 332,600 121,400 (58,000) 396,000 250,000 75,000 71,000 396,000