On January 1, 2014, total assets for Liftoff Technologies were $125,000; on December 31, 2014, total assets were $145,000. On January 1, 2014, total liabilities were $110,000; on December 31, 2014, total liabilities were $115,000. What are the amount of the change and the direction of the change in Liftoff Technologies shareholders' equity for 2014?

Question

Quizplus · Accepted Answer

Shareholders' equity can be calculated as follows:

Shareholders' equity = Total assets - Total liabilities

On January 1, 2014, shareholders' equity was $15,000 ($125,000 - $110,000).

On December 31, 2014, shareholders' equity was $30,000 ($145,000 - $115,000).

Therefore, the change in shareholders' equity for 2014 was an increase of $15,000 ($30,000 - $15,000 = $15,000). Hence, the correct answer is B, increase of $15,000.

On January 1, 2014, Total Assets for Liftoff Technologies Were