Consider the following potential events that might have occurred to Global Conglomerate on December 30, 2015. For each one, indicate which line items in Global's balance sheet would be affected and by how much. Also indicate the change to Global's book value of equity. (In all cases, ignore any tax consequences for simplicity.) a. Global used $ 21 million of its available cash to repay $ 21 million of its long-term debt. b. A warehouse fire destroyed $ 5 million worth of uninsured inventory. c. Global used $ 4 million in cash and $ 6 million in new long-term debt to purchase a $ 10 million building. d. A large customer owing $ 2 million for products it already received declared bankruptcy, leaving no possibility that Global would ever receive payment. e. Global's engineers discover a new manufacturing process that will cut the cost of its flagship product by over 55 %. f. A key competitor announces a radical new pricing policy that will drastically undercut Global's prices.

Question

03-09-2019
Business

contestada

Consider the following potential events that might have occurred to Global Conglomerate on December 30, 2015. For each one, indicate which line items in Global's balance sheet would be affected and by how much. Also indicate the change to Global's book value of equity. (In all cases, ignore any tax consequences for simplicity.) a. Global used $ 21 million of its available cash to repay $ 21 million of its long-term debt. b. A warehouse fire destroyed $ 5 million worth of uninsured inventory. c. Global used $ 4 million in cash and $ 6 million in new long-term debt to purchase a $ 10 million building. d. A large customer owing $ 2 million for products it already received declared bankruptcy, leaving no possibility that Global would ever receive payment. e. Global's engineers discover a new manufacturing process that will cut the cost of its flagship product by over 55 %. f. A key competitor announces a radical new pricing policy that will drastically undercut Global's prices.

Respuesta :

Otras preguntas

From a point on a circle, two perpendicular chords are drawn. One is 6 cm from the center and the other one is 3 cm from the center. Find the lengths of these c

Solve the following for y: y-2=-6(x-(-2))

Washington's surprise attack across the Delaware River on Christmas night... A) ...was the last battle of the revolutionary war B) ...boosted the morale of the

How did buying on credit become a problem in the 1920s?

A kite is flying 70 feet above the ground and is attached to a string tied to a stake on the ground. The angle of elevation formed by the string and the ground

Zander is in charge of filling goodie bags for the upcoming school party.He plans to order prizes from an online party store.The store sells items by the gross

Based on the context clues in this paragraph , greenhorn

Judith lorber believes that gender is a social institution because it is:

Larry read a 400-page book. He read at a rate of 10 pages per day for d days. Write an equation that could be used to find out how many days it took Larry to re

The manager of the bank where you work tells you that your bank has $10 million in excess reserves. she also tells you that the bank has $400 million in deposit

stokholm stokholm · Answer 1 · 2019-09-13T09:21:58+02:00

Answer:

a. Global used $ 21 million of its available cash to repay $ 21 million of its long-term debt.

With this both cash and long term debt is reduced as liability settled through cash.

Assets and liabilities both reduced by $21 million, and no impact on book value of equity.

b. A warehouse fire destroyed $ 5 million worth of uninsured inventory.

This will decrease inventory that is assets by $5 million and at the same time because of loss, book value of equity will also decrease by $5 million.

c. Global used $ 4 million in cash and $ 6 million in new long-term debt to purchase a $ 10 million building.

This will decrease cash which is an asset by $4 million and increase asset that is building by $10 million, and will increase long term debt being liability by $6 million.

There will be no impact on book value of equity.

d. A large customer owing $ 2 million for products it already received declared bankruptcy, leaving no possibility that Global would ever receive payment.

This will decrease the balance of accounts receivables by $2 million and will accordingly decrease the book value of equity.

e. Global's engineers discover a new manufacturing process that will cut the cost of its flagship product by over 55 %.

This will not the balance sheet in any manner, as it will impact the upcoming income statement and also will not impact the book value of equity.

f. A key competitor announces a radical new pricing policy that will drastically undercut Global's prices.

This will not impact the current balance sheet and will also not impact the book value by any means, because this will impact only the income statement to be formed after such change in price.