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AC420 Advanced Accounting Case Part 3




Question;The;Board of Directors of Art Innovations, Inc., has voted to move forward on an;acquisition of an art gallery in Paris, France.;This move will allow them to break into the lucrative French art market;in the shortest amount of time. They;have identified two existing galleries that they are interested in;evaluating. The financial statements for;the 2012 year for each gallery are presented below in Euros.;Relevant;Exchange Rates for the Euro (in U.S. dollars) are as follows;January 1, 2012.60;December 31, 2012.65;Weighted Average, 2012.63;Gallery;#1;Income;Statement;For;the Period Ended December 31, 2012;Sales;270,000;Cost of Goods;Sold;(155,000);Gross Profit;115,000;Less;Operating Expenses;(64,000);Net Income;51,000;Gallery;#1;Balance;Sheet;December;31, 2012;Assets;Cash;44,000;Receivables;46,000;Inventory;58,000;Fixed Assets;(net);139,000;Total Assets;287,000;Liabilities;and Equities;Liabilities;176,000;Common Stock (issued;January 1, 2012);60,000;Retained;Earnings (12/31/12);51,000;Total;Liabilities and Equity;287,000;Gallery;#2;Income;Statement;For;the Period Ended December 31, 2012;Sales;250,000;Cost of Goods;Sold;(110,000);Gross Profit;140,000;Less;Operating Expenses;(70,000);Net Income;70,000;Gallery;#2;Balance;Sheet;December;31, 2012;Assets;Cash;64,000;Receivables;62,000;Inventory;68,000;Fixed Assets;(net);82,000;Total Assets;276,000;Liabilities;and Equities;Liabilities;126,000;Common Stock (issued;January 1, 2012);80,000;Retained;Earnings (12/31/12);70,000;Total;Liabilities and Equity;276,000;1. Translate both sets of;financial statements into U.S. dollars.;2. Evaluate the two galleries;based on the translated financial statements, include ratios that support your;decision as to which gallery would be the best investment for Art;Innovations. You may assume that the;purchase price of both galleries is the same for this analysis.


Paper#40242 | Written in 18-Jul-2015

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