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For a trading company using a physical inventory system, gross margin equals sales less cost of sales, where cost of sales equals opening inventory plus

For a trading company using a physical inventory system, gross margin equals sales less cost of sales, where cost of sales equals opening inventory plus purchases minus closing inventory. 

Your task: Explain when the change in dollar value of opening and closing inventory will result in: (i) assessable income for taxation purposes (ii) an allowable deduction for taxation purposes. Your answer should include reference to the relevant taxation legislation.

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