Question
Terry Galleries is sold by its owner to CBC Ltd. The following is the balance sheet if the Gallery on date of acquisition: Terry Galleries
Terry Galleries is sold by its owner to CBC Ltd.
The following is the balance sheet if the Gallery on date of acquisition:
Terry Galleries
Balance Sheet
As at 30 June 2017
Assets
Liabilities & Equity
Cash
$100,000
Accounts payable
$50,000
Land
70,000
Long-term notes payable
300,000
Building (net)
200,000
Total liabilities
350,000
Equipment
175,000
Share capital
200,000
Copyright (net)
30,000
Retained earnings
25,000
Total Equity
225,000
Total Assets
$575,000
Total liabilities and equity
575,000
CBC considers the following to be a fair statement of the affairs of the gallery:
- Land is undervalued by $30,000
- Equipment is overvalued by $5,000
- CBC incurred a legal cost of $25,000 for the acquisition of the company
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
