The Book Value of Little Statistic's Total Assets Is $400,000

question 21

Essay

The book value of Little Statistic's total assets is $400,000.Suppose Number Crunching Inc.acquires Little Statistic's assets for $1 million and finances the purchase by selling $600,000 in new stock,$300,000 in new debt,and reducing cash by $100,000.Describe how the acquisition affects Number Crunching's balance sheet.

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Definitions:

Capital Balances

Represent the amount of funds contributed by owners plus retained earnings in a company's equity.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenue.

Salary

Regular payments made by an employer to an employee, typically on a monthly or biweekly basis, in exchange for professional services rendered.