Based on the available information, what equipment value adjustments (in millions of dollars) would you make? a) $100M b) $40M c) No adjustments required
Santos Sangria is a 100-plus-year-old distiller and makes the world’s premier sangria. The sangria is produced in two bottling facilities, one of which is 80 years old and has an area of 70,000 square feet and the other was built in 2013 and is 210,000 square feet.
Last year, both facilities upgraded their production lines, each putting in state of the art equipment. Both facilities are located on 100 acres of land, which Santos Sangria purchased for just $10M in 1918.
Relevant information
- Recently, a 35,000 square foot bottling facility in an adjacent town sold for $30M. The transaction did not include any equipment
- The average bottling facility sells for $950 per square foot
- 10 years ago, a 210,000 square foot 10-year-old bottling facility sold for $200M
- Santos Sangria’s land value has been appraised for insurance purposes at $100M
- A 15-acre plot of land directly next to Santos Sangria’s land recently sold for $20M
Santos Sangria’s
------------------------------------
Cash 100
Inventory 5
Receivables 8
Land 10
Buildings 167
Equipment 70
------------------------------------
Total assets 660
Short-term debt 5
Payables 3
Long-term debt 150
Equity 502
----------------------------------
Total L & E 660
Values in millions of $US
Question 1
Based on the information available to you, what land value adjustments (in millions of dollars) would you make?
Note: Please enter only numerical values here. For example, if your answer is 100 million, enter 100.
Question 2
Based on the available information, what equipment value adjustments (in millions of dollars) would you make?
a) $100M
b) $40M
c) No adjustments required
Question 3
Based on the available information, what building value adjustments (in millions of dollars) would you make?
Note: Please enter only numerical values here. For example, if your answer is 100 million, enter 100.
Step by step
Solved in 2 steps
