Question

Assets: $220 million

PPE: $300 million
other Assets: $140 million
Liabilities: $160 million
long-term liabilities: $340 million
1. Use these data to write Gooran​'s accounting equation?

Answer 1

Gooran's accounting equation, based on the given data, is Assets ($440 million) = Liabilities ($500 million) + Equity (-$60 million), indicating the company has negative equity.

Step-by-step explanation:

Gooran's Accounting Equation

The accounting equation represents the relationship between a company's assets, liabilities, and equity. For Gooran, we start by identifying the total assets and liabilities. The assets comprise Property, Plant, and Equipment (PPE) and other assets, whereas the liabilities include both short-term and long-term liabilities. The basic accounting equation is Assets = Liabilities + Equity. To find Gooran's equity, we subtract the total liabilities from the total assets.

Calculating Total Assets

Total Assets = PPE + Other Assets
Total Assets = $300 million + $140 million
Total Assets = $440 million

Calculating Total Liabilities

Total Liabilities = Short-term Liabilities + Long-term Liabilities
Total Liabilities = $160 million + $340 million
Total Liabilities = $500 million

Determining Gooran's Equity

Equity = Total Assets - Total Liabilities
Equity = $440 million - $500 million
Equity = -$60 million (negative equity)

Thus, Gooran's accounting equation is:
Assets ($440 million) = Liabilities ($500 million) + Equity (-$60 million)
This suggests that Gooran has negative equity, indicating a financial deficit.