Assume the information in Figure 13-1 is correct, EXCEPT the market va

Assume the information in Figure 13-1 is correct, EXCEPT the market value of property is now estimated to be $450,000.

Use the Book value Plus Adjustment method along with the information from 13-1 and the new estimated value of property to value the firm’s equity.
A) $1,100,000
B) $1,200,000
C) $1,300,000
D) $1,400,000

ANSWER

A
Explanation: A) BV + Adjustments = $1,200,000 + ($450,000 – $550,000 ) + ($100,000 – $60,000 ) + ($180,000 – $220,000 ) = $1,100,000.