Cash overdraft200,000)1,900,000Accounts receivable, net700,000Property, plant and equipment, netAccounts payable and accrued expensesShare capital640,000Inventory700,0002,500,000500,000200,000Prepaid expensesLandShare premiumRetained earnings2,000,0001,660,000On the date of valuation, it is assessed that the long-term assets of the companywere purchased 5 years ago and never been revalued ever since. Therefore, it wasdetermined that the current fair values of these long-term assets are 20% higherthan their current book value.Required: Determine the value of the firm using cost approach. Case 2On December 31, 2015, Hanzo Company is planning to purchase Buff Incorporated.Hanzo is not sure how much it needs to pay for the acquiring Buff Incorporated. Themanagement of Hanzo wants to determine the value of the firm to decide the price itwill pay to acquire the firm. Buff's statement of financial position showed net assetsof P32,000,000. Buff's assets and liabilities had fair value different from the carryingamount as follows:Carrying amount50,000,000Fair value57,500,000Property, plant and equipment, netOther assets5,000,0003,000,000Long-term debt30,000,00030,000,000What is the minimum price will Hanzo pay to acquire Buff Incorporated?

Introduction: A minimum price is the lowest legal rate that must be imposed, such as a minimum…

On December 31, 2015, Hanzo Company is planning to purchase Buff Incorporated. Hanzo is not sure how much it needs to pay for the acquiring Buff Incorporated. The management of Hanzo wants to determine the value of the firm to decide the price it will pay to acquire the firm. Buff's statement of financial position showed net assets of P32,000,000. Buff's assets and liabilities had fair value different from the carrying amount as follows: Carrying amount 50,000,000 Fair value 57,500,000 Property, plant and equipment, net Other assets 5,000,000 3,000,000 Long-term debt 30,000,000 30,000,000 What is the minimum price will Hanzo pay to acquire Buff Incorporated?

On December 31, 2015, Hanzo Company is planning to purchase Buff Incorporated. Hanzo is not sure how much it needs to pay for the acquiring Buff Incorporated. The management of Hanzo wants to determine the value of the firm to decide the price it will pay to acquire the firm. Buff's statement of financial position showed net assets of P32,000,000. Buff's assets and liabilities had fair value different from the carrying amount as follows: Carrying amount 50,000,000 Fair value 57,500,000 Property, plant and equipment, net Other assets 5,000,000 3,000,000 Long-term debt 30,000,000 30,000,000 What is the minimum price will Hanzo pay to acquire Buff Incorporated?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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