Moss and Carla Vista agree that: 1. Land is undervalued by $32,900. 2. Equipment is overvalued by $5,000. Carla Vista agrees to sell the gallery to Moss for $379,400.

Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 60P
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Fred Moss, owner of Moss Interiors, is negotiating for the purchase of Carla Vista Galleries. The balance sheet of Carla Vista is given in an abbreviated form below. CARLA VISTA GALLERIES BALANCE SHEET AS OF DECEMBER 31, 2017 Assets Liabilities and Stockholders’ Equity Cash $108,000 Accounts payable $51,500 Land 70,300 Notes payable (long-term) 300,900 Buildings (net) 200,300 Total liabilities 352,400 Equipment (net) 175,300 Common stock $230,300 Copyrights (net) 30,300 Retained earnings 1,500 231,800 Total assets $584,200 Total liabilities and stockholders’ equity $584,200 Moss and Carla Vista agree that: 1. Land is undervalued by $32,900. 2. Equipment is overvalued by $5,000. Carla Vista agrees to sell the gallery to Moss for $379,400.
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