How should the cost of the sold casino be established

Assignment Help Finance Basics
Reference no: EM131408251

MGM Grand, Inc. purchased two Las Vegas casinos and the adjoining land for a total of $167 million. Soon afterwards, the company agreed to sell one of the casinos and 58.7 acres of adjacent land for $110 million.

REQUIRED:

a. What issues need to be addressed in order to determine the gain or loss resulting from the sale of one of the casinos? How should the cost of the sold casino be established?

b. Assume that each casino had a cost of $75 million and the adjacent land originally cost $17 million. Provide the journal entry prepared by MGM Grand to record the sale.

c. Explain how the casino and the land would each be valued on the balance sheet of the purchasing company.

d. Assume that an appraiser assesses the value of the land without the hotel to be $43 million. Compute the annual depreciation charge recognized by the purchasing company if it depreciates buildings using the straight-line rate over a period of twenty-five years. Assume no salvage value.

Reference no: EM131408251

Questions Cloud

Arthur anderson questionable accounting practices : Read the Arthur Anderson: Questionable Accounting Practices case. You are to write a four to six (4-6) page paper that answers the following questions:
What conclusion would be reached regarding null hypothesis : For a test at the 0.05 level, what is the critical value of chi-square?- If the calculated value of the chi-square statistic is 8.13, what conclusion would be reached regarding the null hypothesis?
Nike from sweatshops to leadership in employment practices : Read the "Nike: From Sweatshops to Leadership in Employment Practices" case. You are to write a four to six (4-6) page paper that answers the following questions:
What are the most interesting three takeaways : What are the most interesting three takeaways for you from these readings and does Asthma still pose a health risk for people living in the U.S. and in the world? Why or why not?
How should the cost of the sold casino be established : MGM Grand, Inc. purchased two Las Vegas casinos and the adjoining land for a total of $167 million. Soon afterwards, the company agreed to sell one of the casinos and 58.7 acres of adjacent land for $110 million.
What is the critical value of chi square : How many degrees of freedom will be associated with the test? - For a test at the 0.05 level, what is the critical value of chi-square?
Explain the role of the brain in cognitive functions : Write a two-page paper in which you explain the role of the brain in cognitive functions. As a part of your explanation, describe what Phineas Gage's accident revealed about how brain areas support cognitive function.
Components of criminal justice system : Write a 1,400- to 1,750-word paper in which you identify past, present, and future trends relating to high-tech crime in the relationship between the components of criminal justice system and the surrounding community
The geographical distribution of hotline callers : At the 0.05 level, can we conclude that the geographical distribution of hotline callers could be the same as the U.S. population distribution?

Reviews

Write a Review

Finance Basics Questions & Answers

  What is the payback period for this project

Binder Corp. has invested in new machinery at a cost of $1,450,000. This investment is expected to produce cash flows of $640,000, $715,250, $823,330, and $907,125 over the next four years. What is the payback period for this project?

  Explain why accurate loss reserve estimates are important

Explain why accurate loss reserve estimates are important. Describe factors that can affect the frequency and severity of claims. Identify the two loss ratios used in the loss ratio ratemaking method.

  What is the npv of the project

Suppose your required return on the project is 9 percent and your pretax cost savings are $193,000 per year. What is the NPV of the project? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) NPV $ Requi..

  What inventory model

1. What inventory model is appropriate for this model? 2. How many bottles should be ordered during that particular visit?

  What is the value of the net working capital

Donut Delite has total assets of $31,300, long-term debt of $8,600, net fixed assets of $19,300, and owners' equity of $21,100. What is the value of the net working capital?

  What are the major elements of a typical business plan?

What are the major elements of a typical business plan?

  What is the firm''s degree of financial leverage (dfl)

The CFO determined that the firm's degree of operating leverage (DOL) is 3× at sales equal to $900,000. She also determined that, if sales are actually $945,000, EPS will be $2.60 rather than the forecasted value of $2.00. What is the firm's degre..

  Identify greatest risks that negatively impact investment

identify the three greatest risks that could negatively impact the investment. - These risks could be explicitly identified by the firm in your research.

  Find the net proceeds from the sale of each bond

Flotation costs of $30 per bond will be incurred in the process (which implies that f = 2.97%, or 0.0297 in decimal form) and the firm is in a 40% tax bracket.

  Remaining loan amount necessary to sell

A truck costing $112000 is paid off in monthly installments over four years with 8% APR. After three years the owner wishes to sell the truck. What is the closest amount from the following list that he needs to pay on his loan before he can sell h..

  Computation of issue price return and market price on bonds

Computation of issue price return and market price on bonds and Calculate the yield to maturity assuming the investor buys the bond at the following price

  If a bank finds that its roe is too low because it has too

if a bank finds that its roe is too low because it has too much bank capital what can it do to raise is

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd