Highrate Company's 2008 historical cost income statement is as follows:

Highrate’s management is concerned about the increase in inventory costs as well as the increasing costs of property, plant and equipment. Management believes that the current cost of inventory sold is 25% higher than its historical cost at the time of sale. In addition, if property, plant and equipment were valued at current costs, an additional $1,000 of depreciation would be recorded.
Required:
1. Prepare a current cost income statement for Highrate Company.
2. Assume that you are a Highrate Company shareholder. Which net income figure do you think is more useful? Why?

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Sales Cost of sales Gross margin Depreciation Other operating expenses Net income $20,000 8,000 12,000 2,000 8,000 $ 2,000