Question

On March 1, ABX Company’s assets are $100,000 and its liabilities are $30,000. On March 5, ABX is fined $15,000 for failing emission standards. ABX immediately pays the fine in cash. After the fine is paid, what is the amount of equity for ABX?

Answer 1

The amount of the stockholders' equity for ABX immediately after paying the fine for failing emission standards of $15,000 is $55,000.

What is stockholders' equity?

stockholders' equity represents the interest of the owners in the entity.

stockholders' equity value is calculated as the difference between the company's assets and liabilities.

Data and Calculations:

Assets = $100,000

Liabilities = $30,000

Equity before fine = $70,000 ($100,000 - $30,000)

Emission Fine = $15,000

Equity after paying the fine = $55,000 ($70,000 - $15,000)

Thus, the amount of the stockholders' equity for ABX immediately after paying the fine for failing emission standards of $15,000 is $55,000.

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