Answer:
Lanni Products
a1. Balance Sheet after getting the bank loan:
Assets:
Computer equipment $30,000
Cash 70,000
Total assets $100,000
Notes Payable (Bank Loan) 50,000
Owners' equity 50,000
Liabilities + Equity $100,000
a2. Ratio of real assets to total assets:
= $30,000/$100,000
= 0.3
b1. Balance Sheet after spending the $70,000 to develop its software product:
Assets:
Computer equipment $30,000
Software 70,000
Cash 0
Total assets $100,000
Notes Payable (Bank Loan) 50,000
Owners' equity 50,000
Liabilities + Equity $100,000
b2. The ratio of real assets to total assets
= $30,000/$100,000
= 0.3
c1. Balance Sheet after accepting payment of shares from Microsoft:
Assets:
Computer equipment $30,000
Investment in shares 140,000
Cash 0
Total assets $170,000
Notes Payable (Bank Loan) 50,000
Owners' equity 120,000
Liabilities + Equity $170,000
c2. The ratio of real assets to total assets:
= $30,000/$170,000
= 0.2
Explanation:
a) Data and Calculations:
Assets:
Computer equipment $30,000
Cash 20,000
Owners' equity $50,000
Cash Account:
Beginning balance $20,000
Bank loan 50,000
Cash balance after $70,000
Software development ($70,000)
Balance after software $0
Microsoft shares 140,000 (2,000 * $70)
Loan payment (50,000)
Ending Balance $90,000
Note Payable (Bank Loan) = $50,000
a) Lanni' real assets are the tangible assets (for example, computer equipment) that have an inherent value due to their physical attributes, and examples include metals, commodities, land, and factory, building, and infrastructural assets. Lanni's Software is not treated as a real asset. Similarly, the Investment in Microsoft is not a real asset.
