Statement of Owners’ Equity

Youngberg Company owns several acres of land that were recently appraised at $1.5 million. Youngberg purchased this land 10 years ago at a cost of $150,000.

What amount should Youngberg show on its external balance sheet? Why?

What amount should Youngberg report on its internal balance sheet? Why?

Phelan Enterprises has a building that cost $987,000 when it was purchased five years ago. This building is being depreciated using the straight-line depreciation method over its useful life of 20 years. Recently the building was appraised for $1,000,000.

What amount would be shown on the external balance sheet? Why?

What amount(s) do you believe is important for management to understand? Why?

Sinason Company is authorized to issue 2 million shares of common stock. At the beginning of 2010 it had 450,000 shares of common stock issued and 400,000 shares outstanding. The Common Stock account had a balance of $112,500 while the Additional Paid-in Capital account had a balance of $8,820,000. The Treasury Stock account had a balance of $750,000. During 2010 Sinason reissued all the treasury stock for $20 per share.

Show how these events would be reported on the 2010 Statement of Owners’ Equity.

Solution: