Problema Solution
Assume that a business's balance sheet reports total assets of 500,000 and total liabilities of 300,000. Now assume that 20,000 of net fixed assets are written off due to technological obsolescence. All else the same, what it the total equity of the business after the write-off?
*I got 180,000 as my answer, but I was wondering if it was correct? Thanks!
Answer provided by our tutors
yes, regrets for the delayed reply
technological obsolescence would be a liability:
500000 - 300000 - 20000 = 180000
total equity of 180,000 after the write-off
now, it is worthwhile to point out that specialized knowledge may play into problems that appear to be purely arithmetic; for example, perhaps there is a limit/cap placed on certain write-offs, etc., so whenever a problem is caste in a specialized context, such as business balance sheets, one has to be careful to point out that your course may have introduced concepts/constraints that are not explicitly stated in the problem as presented