Accounting Equation The Walt Disney Company (DIS) had the following assets and l

Question

Accounting Equation The Walt Disney Company (DIS) had the following assets and liabilities (in millions) at the end of Year 1. Assets $84,141 Liabilities 39,183 a. Determine the stockholders' equity of Walt Disney at the end of Year 1. 44,958 million b. If assets increased by $4,041 million and stockholders' equity decreased by $433 million, what was the increase or decrease in liabilities for the Year 22 42,791 |X million increase c. What were the total assets, liabilities, and stockholders' equity at the end of Year 2? Total assets Total liabilities 88, 1821 million 42,791 X million 44,958 | X million Total stockholders' equity d. Based upon your answer to (c), does the accounting equation balance? Yes v

Explanation / Answer

a)

Stockholder’s equity

= Assets – Liabilities

= $84,141 - $39,183

= $44,958 million

b)

New Assets for year 2

= Assets at the end of year 1 + Increase in assets

= $84,141 + $4,041

= $88,182 million

New Stock holder’s equity

= Stockholder’s equity at the end of year 1 – Decrease in stockholder’s equity

= $44,958 - $433

= $44,525 million

Now, Assets – Liabilities = Stockholder’s equity

So, Liabilities

= Assets - Stockholder’s equity

= $88,182 - $44,525

= $43,657

So, Increase in liabilities at the end of year 2

= Liabilities at the end of year 2 – Liabilities at the end of year 1

= $43,657 - $39,183

= $4,474 million

c)

Total assets as calculated above = $88,182 million

Total liabilities as calculated above = $43,657 million

Stockholders’ equity as calculated above = $44,525 million

d)

As per above calculations, the accounting equation balances as Assets are the resultant of sum total of Liabilities and stockholders’ equity

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