Question#6 Nickolas Imports recorded a restructuring charge of $21.6 million during fiscal 2014 related entirely to the closing of its California based operations in San Diego and in Tijuana, Mexico. The company’s financial statement footnotes indicated that expected employee separation payments amounted to $16.8 million and that fixed asset write-downs accounted for the remainder. Nickolas had never before incurred restructuring charges. At the end of the year, the company’s balance sheet included a restructuring accrual of $3,600,000.
Required: Use the financial statements effect templates to record
1. the restructure charges
2. the cash settlements.
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Balance Sheet |
Income Statement |
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|
Transaction |
Cash Asset |
+ |
Noncash Assets |
= |
Liabil- ities |
+ |
Contrib. Capital |
+ |
Earned Capital |
Rev-enues |
– |
Expen-ses |
= |
Net Income |
|
= |
– |
= |
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|
= |
– |
= |
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= |
– |
= |
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| Balance Sheet | Income Statement | |||||||||||||
| Transaction | Cash Asset | + | Noncash Assets | = | Liabilities | + | Contributed Capital | + | Earned Capital | Revenues | - | Expenses | = | Net Income |
| 1 | + | -4800000 | = | 16800000 | + | + | -21600000 | - | 21600000 | = | -21600000 | |||
| 2 | -13200000 | + | = | -13200000 | + | + | - | = | ||||||
| Balance | -13200000 | + | -4800000 | = | 3600000 | + | 0 | + | -21600000 | 0 | - | 21600000 | = | -21600000 |
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