Indicate How Each Event Affects the Horizontal Financial Statements Model

question 2

Essay

Indicate how each event affects the horizontal financial statements model. Use the following letters to record your answer in the box shown below. If an event increases one account and decreases another account equally within the same element, record I/D. If an event has no impact on the element, record NA. You do not need to enter amounts.Increase = IDecrease = DNot Affected = NAThe Baltimore Company acquired the Chesapeake Company for $650,000 cash. Chesapeake's assets had been appraised at $660,000. At the time of sale Chesapeake's accounting records showed total assets of $590,000, liabilities of $180,000 and stockholders' equity of $410,000. How would the purchase affect Baltimore's financial statements?

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Definitions:

Accounting

The systematic recording, reporting, and analysis of financial transactions of a business.

Business Organizations

Entities formed for the purpose of carrying on a commercial enterprise, including sole proprietorships, partnerships, corporations, and other types.

Key Attributes

Essential properties or characteristics that define or identify something, often used in database systems to describe significant fields in a table.

Generally Accepted Accounting Principles

A collection of commonly-followed accounting rules and standards for financial reporting.