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Bud's Luxury Vehicles, Inc.
Balance Sheet. December 31, 2011
Building and Land
Total Book value
Total market value of all assets
Common Stock (Owner’s Investment)
Total Debt and Equity (Book Value)
Total market value of stockholder's equity
(FMV of corporate stock may not be equal to FMV of net assets, but it is in this case.)
Bud began the auto sales business in 1970 with a $2,000,000 investment, and
has owned and operated it as a C Corporation since that time.
In 1982, the corporation bought additional land, built the motorhome sales building
and began selling motorhomes. The real estate has appreciated substantially.
Each dealership is located in a building valued at $4,000,000 (including land).
The inventory has a value equal to its cost (B.V.) shown in the financial statements.
The corporation typically has taxable income of about $400,000 per year, after
deducting reasonable salaries for employees and officers.
The two dealerships have equal sales and each contributes about
$200,000 per year to taxable income.
The Possible Corporate Acquisition
Big Corporation operates auto dealerships throughout the United States.
Big Corp. has offered $15,000,000 for all stock in Bud's Luxury Vehicles, Inc.