(Solution Download) AC420 Advanced Accounting Case Part 3 The Board of Directors of Art Innovations, Inc., has voted to.


AC420 Advanced Accounting Case Part 3 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 December 31, 2012 Weighted Average, 2012 .60 .65 .63 Gallery #1 Income Statement For the Period Ended December 31, 2012 Sales Cost of Goods Sold Gross Profit Less: Operating Expenses Net Income 270,000 (155,000) 115,000 (64,000) 51,000 Gallery #1 Balance Sheet December 31, 2012 Assets Cash Receivables Inventory Fixed Assets (net) Total Assets 44,000 46,000 58,000 139,000 287,000 Liabilities and Equities Liabilities Common Stock (issued January 1, 2012) Retained Earnings (12/31/12) Total Liabilities and Equity 176,000 60,000 51,000 287,000 AC420 Advanced Accounting Case Part 3 Gallery #2 Income Statement For the Period Ended December 31, 2012 Sales Cost of Goods Sold Gross Profit Less: Operating Expenses Net Income 250,000 (110,000) 140,000 (70,000) 70,000 Gallery #2 Balance Sheet December 31, 2012 Assets Cash Receivables Inventory Fixed Assets (net) Total Assets 64,000 62,000 68,000 82,000 276,000 Liabilities and Equities Liabilities Common Stock (issued January 1, 2012) Retained Earnings (12/31/12) Total Liabilities and Equity 126,000 80,000 70,000 276,000 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.

 







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