Please solve the following question. Please show work.
XKE is a small firm with a book value of assets of $450,000 and liabilities of $270,000. Its assets include property listed at cost of $70,000 but was recently assessed at a market value of $115,000. The firm has $50,000 of obsolete inventory with no assumed liquidation value. Other assets are believed to have liquidation values near book values. Estimate the value of the firm’s equity based on the “book value of equity plus adjustments” method.
Calculation of Value of the firm’s equity based on the “book value of equity plus adjustments” method. | ||||
Particulars | Amount | |||
Book Value of Assets | $ 450,000.00 | |||
Adjustment | ||||
Add | Fair Value of Assets Adjustment = (115000-70000)= | $ 45,000.00 | ||
Less | Inventory Obsolete( No Value) | $ 50,000.00 | ||
Fair Value of Total Assets | $ 445,000.00 | |||
Less | Book Value of Liabilities | $ 270,000.00 | ||
Value of the firm’s equity | $ 175,000.00 |
Please Upvote
Thanks
Get Answers For Free
Most questions answered within 1 hours.