Hal owns a small piece of land that the company acquired five years ago for $15K. Explain why or why not the balance sheet value of the land is an appropriate gauge of the fair market value of the land today_

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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6.
Hal owns a small piece of land that the company acquired five years ago for $15K. Explain why
or why not the balance sheet value of the land is an appropriate gauge of the fair market value
of the land today_
Transcribed Image Text:6. Hal owns a small piece of land that the company acquired five years ago for $15K. Explain why or why not the balance sheet value of the land is an appropriate gauge of the fair market value of the land today_
Hal's Ice Cream Stands
$ Thousands
Assets
Cash and cash equivalents
Accounts receivable
Inventories
Total Current Assets
Equipment
Less accumulated depreciation
Land Holdings
Total Assets
Liabilities & Shareholders' Equity
Accounts Payable
Short-term Debt
Total Current Liabilities
Long-Term Debt
Total Liabilities
Shareholders' Equity
Liabilities & Shareholders' Equity
Hal's Income Statement for the Year Ending
12/31/2021
($ 000s except for earnings per share)
Sales
Cost of Goods Sold
Payroll and employee benefits
Gross Operating Profit
Selling, general and administrative expenses
Income from Operations
Interest expense
Income taxes
Net Income
Earnings per share of common stock ($)
2021
$100
50
75
$225
300
(5)
15
$535
200
50
250
100
350
???
$535
$500
100
200
200
100
100
5
20
$75
$0.25
Transcribed Image Text:Hal's Ice Cream Stands $ Thousands Assets Cash and cash equivalents Accounts receivable Inventories Total Current Assets Equipment Less accumulated depreciation Land Holdings Total Assets Liabilities & Shareholders' Equity Accounts Payable Short-term Debt Total Current Liabilities Long-Term Debt Total Liabilities Shareholders' Equity Liabilities & Shareholders' Equity Hal's Income Statement for the Year Ending 12/31/2021 ($ 000s except for earnings per share) Sales Cost of Goods Sold Payroll and employee benefits Gross Operating Profit Selling, general and administrative expenses Income from Operations Interest expense Income taxes Net Income Earnings per share of common stock ($) 2021 $100 50 75 $225 300 (5) 15 $535 200 50 250 100 350 ??? $535 $500 100 200 200 100 100 5 20 $75 $0.25
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