Reinhoff Inc.reported total assets of €2,600,000, including €435,000 for inventory, and equity of €1,490,0000 on the December 31, 2011 statement of financial position.Reinhoff subsequently determined that the ending inventory was understated by €63,000.What is the corrected amount of equity for the year?

Question

Quizplus · Accepted Answer

The corrected amount of inventory should be €498,000 (€435,000 + €63,000). Total assets would then be €2,663,000. Equity would be equal to total assets minus liabilities, and since no liabilities are given, equity would be €2,663,000 - €1,490,000 = €1,553,000.