You manage a real estate investment company. One year ago, the company purchased 10 parcels of land distributed throughout the community for $11.2 million each. A recent appraisal of the properties indicates that five of the parcels are now worth $9.2 million each, while the other five are worth $17.0 million each. Ignoring any income received from the properties and any taxes paid over the year, calculate the investment company's accounting earnings and its economic earnings in each of the following cases: a. The company sells all of the properties at their appraised values today. b. The company sells none of the properties. c. The company sells the properties that have fallen in value and keeps the others. d. The company sells the properties that have risen in value and keeps the others. Note: Negative amounts should be indicated by parentheses. Enter your answers in millions. Case a. b. C. d. Accounting Economic Income (million) Income (million)

You manage a real estate investment company. One year ago, the company purchased 10 parcels of land distributed throughout the community for $11.2 million each. A recent appraisal of the properties indicates that five of the parcels are now worth $9.2 million each, while the other five are worth $17.0 million each. Ignoring any income received from the properties and any taxes paid over the year, calculate the investment company's accounting earnings and its economic earnings in each of the following cases: a. The company sells all of the properties at their appraised values today. b. The company sells none of the properties. c. The company sells the properties that have fallen in value and keeps the others. d. The company sells the properties that have risen in value and keeps the others. Note: Negative amounts should be indicated by parentheses. Enter your answers in millions. Case a. b. C. d. Accounting Economic Income (million) Income (million)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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