Question: Twenty years ago Sigurdsen Corp purchased an office building in

Twenty years ago Sigurdsen Corp. purchased an office building in Oslo for 12 million Norwegian kroner (Kr), 4 million of which was attributable to land. Sigurdsen has fully paid off the mortgage. The current balance sheet follows (in millions):

The company is about to borrow Kr 18 million on a first mortgage to modernize and expand the building. This amounts to 60% of the Kr 30 million appraised value of the combined land and building before the modernization and expansion. Prepare a balance sheet after Sigurdsen Corp. obtains the loan and expands and modernizes the building, but before it charges any further depreciation. Comment on the usefulness of the balancesheet.

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  • CreatedNovember 19, 2014
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