$ Amount 50,000 250,000 300,000 500,000 Assets Cash Accounts receivable Inventory Building $600,000 Less: Accumulated depreciation $100,000 Goodwill 300,000 1,400,000 Total Assets Liabilities Accounts payable Income tax payable Bank loan 70,000 30,000 800,000 900,000 Total liabilities A review of the business operations shows that building was bought 4 years ago and is reported at carrying amount of $500,000, the current market value of the building is $1,000,000. Inspection of inventory reveals that 10% of the inventory is obsolete, for which there is limited demand. Further 12% of the accounts receivable is overdue by more than 120 days. The accounts receivable and inventory are carried at their gross amount and cost value respectively on the financial statements. A review of Income statement reveals that business has not provided for any bad debt expense and
$ Amount 50,000 250,000 300,000 500,000 Assets Cash Accounts receivable Inventory Building $600,000 Less: Accumulated depreciation $100,000 Goodwill 300,000 1,400,000 Total Assets Liabilities Accounts payable Income tax payable Bank loan 70,000 30,000 800,000 900,000 Total liabilities A review of the business operations shows that building was bought 4 years ago and is reported at carrying amount of $500,000, the current market value of the building is $1,000,000. Inspection of inventory reveals that 10% of the inventory is obsolete, for which there is limited demand. Further 12% of the accounts receivable is overdue by more than 120 days. The accounts receivable and inventory are carried at their gross amount and cost value respectively on the financial statements. A review of Income statement reveals that business has not provided for any bad debt expense and
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
In the image attached, a
Demonstrates a thorough understanding and knowledge of how the worth of a business is determined and explain the measurement basis that can result he will need to provide.

Transcribed Image Text:$ Amount
50,000
250,000
Assets
Cash
Accounts receivable
Inventory
Building
$600,000
300,000
500,000
Less:
Accumulated
depreciation
$100,000
Goodwill
300,000
Total Assets
| 1,400,000
Liabilities
70,000
30,000
800,000
900,000
Accounts payable
Income tax payable
Bank loan
Total liabilities
A review of the business operations shows that building was bought 4 years ago and is reported at
carrying amount of $500,000, the current market value of the building is $1,000,000. Inspection of
inventory reveals that 10% of the inventory is obsolete, for which there is limited demand. Further
12% of the accounts receivable is overdue by more than 120 days. The accounts receivable and
inventory are carried at their gross amount and cost value respectively on the financial statements.
A review of Income statement reveals that business has not provided for any bad debt expense and
upward prevision of inventory.
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