8-66 Meaning of Book Value Wagner Company purchased an office building 20 years ago for $1.3 million, $500,000 of which was attributable to land. The mortgage has been fully paid. The current balance sheet follows: Cash Land Building at cost $ 300,000 500,000 Stockholders' equity $1,000,000 $ 800,000 Accumulated depreciation (600,000) 200,000 $1,000,000 Net book value Total assets The company is about to borrow $1.8 million on a first mortgage to modernize and expand the building. This amounts to 60% of the combined appraised fair value of the land and building before the modernization and expansion. Prepare a balance sheet after the loan is made and the building is expanded and modernized. Comment on its significance.

8-66 Meaning of Book Value Wagner Company purchased an office building 20 years ago for $1.3 million, $500,000 of which was attributable to land. The mortgage has been fully paid. The current balance sheet follows: Cash Land Building at cost $ 300,000 500,000 Stockholders' equity $1,000,000 $ 800,000 Accumulated depreciation (600,000) 200,000 $1,000,000 Net book value Total assets The company is about to borrow $1.8 million on a first mortgage to modernize and expand the building. This amounts to 60% of the combined appraised fair value of the land and building before the modernization and expansion. Prepare a balance sheet after the loan is made and the building is expanded and modernized. Comment on its significance.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter11: Depreciation, Depletion, Impairment, And Disposal

Section: Chapter Questions

Problem 1RE: Susquehanna Company purchased an asset at the beginning of the current year for 250,000. The...

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