Question

In: Finance

1. The value of timberlands on a company’s balance sheet can be increased if the market...

1. The value of timberlands on a company’s balance sheet can be increased if the market value of timber increases. True or false and why?

Solutions

Expert Solution

  • Yes balance sheet increases because when a market value increase so, revenue also increases ,because there is directly effect of revenue on balance sheet , revenue included the sales of merchandise , let's assume that today a corporation sold goods on credit. the corporation's current assest accounts receivable will increase and the company will credit the income statement account sales. however, the sales account is a temporary account that has the effect of increasing the corporation's retained earnings.

Related Solutions

Your firm’s market value balance sheet is given as follows: Market Value Balance Sheet Excess cash...
Your firm’s market value balance sheet is given as follows: Market Value Balance Sheet Excess cash $30M Debt $230M Operating Assets $500M Equity $300M Asset Value $530M Debt + Equity $530M Assume that the you plan to keep the firm’s debt-to-equity ratio fixed. The firm’s corporate tax rate is 50%. The firm’s cost of debt is 10% and cost of equity is 20%. Now, suppose that you are considering a new project that will last for one year. According to...
Your firm’s market value balance sheet is given as follows: Market Value Balance Sheet Excess cash...
Your firm’s market value balance sheet is given as follows: Market Value Balance Sheet Excess cash $30M Debt $230M Operating Assets $500M Equity $300M Asset Value $530M Debt + Equity $530M Assume that the you plan to keep the firm’s debt-to-equity ratio fixed. The firm’s corporate tax rate is 50%. The firm’s cost of debt is 10% and cost of equity is 20%. Now, suppose that you are considering a new project that will last for one year. According to...
what is the difference between a book-value balance sheet and a market value balance sheet? Which...
what is the difference between a book-value balance sheet and a market value balance sheet? Which provides better information to investors and management.
[Q24-35] Your firm’s market value balance sheet is given as follows: Market Value Balance Sheet Excess...
[Q24-35] Your firm’s market value balance sheet is given as follows: Market Value Balance Sheet Excess cash $30M Debt $230M Operating Assets $500M Equity $300M Asset Value $530M Debt + Equity $530M Assume that the you plan to keep the firm’s debt-to-equity ratio fixed. The firm’s corporate tax rate is 50%. The firm’s cost of debt is 10% and cost of equity is 20%. Now, suppose that you are considering a new project that will last for one year. According...
QUESTION 24 [Q24-35] Your firm’s market value balance sheet is given as follows: Market Value Balance...
QUESTION 24 [Q24-35] Your firm’s market value balance sheet is given as follows: Market Value Balance Sheet Excess cash $30M Debt $230M Operating Assets $500M Equity $300M Asset Value $530M Debt + Equity $530M Assume that the you plan to keep the firm’s debt-to-equity ratio fixed. The firm’s corporate tax rate is 50%. The firm’s cost of debt is 10% and cost of equity is 20%. Now, suppose that you are considering a new project that will last for one...
A company’s Balance Sheet (in millions)
A company’s Balance Sheet (in millions) Assets                                                             Liabilities & Equity Current                        $120               Net Fixed                    $180                            Bonds ($1000 Par)                  130                                                                         Preferred stocks ($100 Par)   50 Total                           $200                            Common Stock ($1 par)         20                                                                         Total                                       $200 The company's bonds have 9 years to mature, pay 10% coupon rate semi-annually and comparable bonds' YTM is 11%. The company’s applicable tax rate is 40%. The market price of common stock is $12.50 per share. The common stock dividend has grown at a steady rate from...
For which of the following balance sheet items will the book value and market value most likely be closest at the time the balance sheet is prepared?
For which of the following balance sheet items will the book value and market value most likely be closest at the time the balance sheet is prepared? Select one:  a. Long-term debt  b. Common stock  c. Net fixed assets  d. Retained earnings  e. Short-term debt
Which of the following are now reported at fair market value on the balance sheet and...
Which of the following are now reported at fair market value on the balance sheet and changes in such values are included in earnings (net income)? Trading securities Available for sale securities Securities held to maturity Both trading and available for sale securities Cash paid for inventory is computed under the direct method on the statement of cash flows by adding an increase in inventory to cost of goods sale deducting an increase in inventory to cost of goods sold...
The balance sheet for the Chrome Corp. is shown here in market value terms. There are...
The balance sheet for the Chrome Corp. is shown here in market value terms. There are 9,300 shares of stock outstanding. The balance sheet for the Chrome Corp. is shown here in market value terms. There are 9,300 shares of stock outstanding. Market Value Balance Sheet Cash $29,500 Equity $133,920 Fixed Assets $104,420 Total $133,920 Total $133,920 The company has declared a dividend of $0.72 per share. The stock goes ex-dividend tomorrow. Ignoring any tax effects, what is the stock...
Here are book- and market-value balance sheets of the United Frypan Company: Book-Value Balance Sheet Net...
Here are book- and market-value balance sheets of the United Frypan Company: Book-Value Balance Sheet Net working capital $ 35 Debt $ 40 Long-term assets 65 Equity 60 $ 100 $ 100 Market-Value Balance Sheet Net working capital $ 35 Debt $ 40 Long-term assets 190 Equity 185 $ 225 $ 225 Assume that MM’s theory holds except for taxes. There is no growth, and the $40 of debt is expected to be permanent. Assume a 37% corporate tax rate....
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT