Accounting Equation The Walt Disney Company DIS had the foll

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

Solution

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