Question 1: The book value of Nott's Nursery's total assets is $400,000. Suppose Golden Gardens Inc. acquires Nott's Nursery's assets for $1 million and finances the purchase by selling $ 600,000 in new stock, $ 300,000 in new debt, and reducing cash by $ 100,000. Describe how the acquisition affects Golden Gardens Inc., balance sheet.
Question 2: Please ignore taxes for this problem. During 2004, Backey Construction earned net income of $250,000. The firm neither bought nor sold any capital assets. The book value of its assets declined by the years depreciation charge, which was $200,000. The firm's operating cash flow for the year was $450,000. The market value of its assets increased by #300,000. What was Beckey constration's economic income for the year? Why is this figure different from its accounting income?