Case 5.

2 Q-1
Income Statements : Particulars Sales Sales meth: 1,80,000*$2.90 Less : CGS Op. stock/inventory + production [2,10,000* 0.513] cl. Stock 15,390 [ 30,000* 0.513] CGS Gross profit Less: Other expenses Net Profit/ Income 92,340 4,29,660 1,83,000 2,46,660 0 1,07,730 Sales Method 5,22,000

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000]*0.62.80.000 1.000*2.000*$2.Particulars Sales Sales meth: 1.90 -20. Stock Collection Method 4.80.10.83.000*2.513 CGS Gross profit Less: Other expenses Net Profit/ Income 82.513] cl.080 3.320 1.80.98] 0 1. stock/inventory + production [2.400 [ 1.000* 0.97.000 +20.90 Less : CGS Op.730 - 25.650= [ 30.07.320 .

83.370 1.80.07.100 [ 1.06.000* 0.000*3. Stock 0 [ no inventory under production method] CGS Gross profit Less: Other expenses Net Profit/ Income 1.90+ 30.000@2.Particulars Sales Sales meth: 1.07.14.07] Less : CGS Op.90 Production method 6.370 0 1.80. stock/inventory + production [2.730 5.000*$2.23.10.000 3.513] cl.730 - .

390 3.500 Inventory Land Net Building& machinery Total Assets 15.93.000*2.98] Liabilities + Owners Equity Particulars Current Liabilities Owners Equity + Common paid up stock Amount 33.600 [20.Balance Sheets: Balance Sheet Grennell Farm [in $] (Sales Method) Assets Particulars Cash A/R Amount 30.390 .E (balance) 102.75.000 1.890 5.390 Total Liabilities 593.12.000 457.500 R.900 59.

500 Inventory Land Net Building& machinery Total Assets 25.000 1.650 3.900 0 Liabilities + Owners Equity Particulars Current Liabilities Owners Equity + Common paid up stock Amount 33.000 457.E (balance) 53550 544.Balance Sheet Grennell Farm [in $] (Collection Method) Assets Particulars Cash A/R Amount 30.12.050 .75.500 R.050 Total Liabilities 544.

500 R.600 670.700 [(20.75.000 1.Balance Sheet Grennell Farm [in $] (Production Method) Assets Particulars Cash A/R Amount 30.98) + (30000 * 3.100 .500 Inventory Land Net Building& machinery Total Assets 0 3.E (balance) 179.900 151.12.000 457.100 Total Liabilities 670.000*2.07)] Liabilities + Owners Equity Particulars Current Liabilities Owners Equity + Common paid up stock Amount 33.

But if it s actual worth is to be calculated it can be done as follows: 225000(for 100 acres) + 1995000 (1900 * 1050) = 2220000 (2.22 million dollars) Q-3 ROI = Net Income / Investment Sales Method ROI=246660/2405390(560390 + 1845000) =10.25% Collection Method ROI=197320/2356050(511050 + 1845000) = 8.37% Production Method ROI = 323370/2482100(637100 + 1845000) = 13. Hence she should retain the farm.Q-2 Under GAAP the value of the land should be recorded at the original price of buying + depreciation without considering the appreciation cost. .03% The return of Investment is good in all cases.

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