Reference no: EM132820091

Personal Balance Sheet Task

Suppose that your personal financial situation is composed of these seven assets:

1. A house that you live in and bought 20 years ago for $150,000. 2. A car that you purchased new 3 years ago for $22,000. 3. In your home, you have a pantry full of household supplies and various food items. If you took the time to figure it out, you paid $500 for those items and their age ranges from 2 days to 10 months.

4. In your home, you also have a closet (in fact 5 closets) full of clothes. You never throw clothes away. Some of the items were bought this year, while some were purchased 8 years ago. The purchase prices for all of them, at the times they were bought, sum to $2,500.

5. Your brokerage statements arrived in the mail today. The statements depict the various stocks you have bought over the past 12 years and currently own. The prices you have paid for those shares of stock total $100,000.

6. As you think about your financial situation, you recall the $10,000 loan you made to your brother whom you have not heard from in 2 years.

7. Finally, just last year, you invested $5,000 in a friend's wedding-planning business. She does the work, but it was your $5,000 that got the business going. You and she have agreed that your $5,000 investment represents a 40% stake in the business.

On a personal balance sheet that you might construct for yourself, would all those assets be reported? If so, at what dollar figure? For each of those items, what is the parallel asset that a company might have? How would a company report each equivalent asset on its GAAP-based corporate balance sheet?