Chester\'s balance sheet has $106,397,000 in equity. Next year they expect Asset

Question

Chester's balance sheet has $106,397,000 in equity. Next year they expect Assets to increase by $4,000,000 and Liabilities to decrease by $2,000,000. If that happens, what will be Chester's book value? Select: 1 $100,397,000 $112,397,000 $108,397,000 $48,755,000 Chester's balance sheet has $106,397,000 in equity. Next year they expect Assets to increase by $4,000,000 and Liabilities to decrease by $2,000,000. If that happens, what will be Chester's book value? Select: 1 $100,397,000 $112,397,000 $108,397,000 $48,755,000

Explanation / Answer

Solution: 112,397,000

Working:

Change in Book-Value = Change in Assets - Change in Liabiities

= 4,000,000 - (-2,000,000) = 6,000,000

New book-value = Opening balance of Equity + increase in Book-value

= 106,397,000 + 6,000,000 = 112,397,000

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