Use the table for the question(s)below.
Statement of Financial Position

-The above diagram shows a statement of financial position for a certain company.All quantities shown are in millions of dollars.How would the balance sheet change if the company's long-term assets were judged to depreciate at an extra $5 million per year?
A)Net property,plant,and equipment would rise to $126 million,and Total Assets and Stockholders' Equity would be adjusted accordingly.
B)Net property,plant,and equipment would fall to $116 million,and Total Assets and Stockholders' Equity would be adjusted accordingly.
C)Long-Term Liabilities would rise to $182 million,and Total Liabilities and Stockholders' Equity would would be adjusted accordingly.
D)Long-Term Liabilities would fall to $172 million,and Total Liabilities and Stockholders' Equity would be adjusted accordingly.
E)Net property,plant,and equipment would be unchanged,and Total Assets and Stockholders' Equity would also remain the same.

Question

Use the table for the question(s)below.
Statement of Financial Position
 
-The above diagram shows a statement of financial position for a certain company.All quantities shown are in millions of dollars.How would the balance sheet change if the company's long-term assets were judged to depreciate at an extra $5 million per year?
A)Net property,plant,and equipment would rise to $126 million,and Total Assets and Stockholders' Equity would be adjusted accordingly. 
B)Net property,plant,and equipment would fall to $116 million,and Total Assets and Stockholders' Equity would be adjusted accordingly. 
C)Long-Term Liabilities would rise to $182 million,and Total Liabilities and Stockholders' Equity would would be adjusted accordingly. 
D)Long-Term Liabilities would fall to $172 million,and Total Liabilities and Stockholders' Equity would be adjusted accordingly. 
E)Net property,plant,and equipment would be unchanged,and Total Assets and Stockholders' Equity would also remain the same.

Quizplus · Accepted Answer

If the company's long-term assets were judged to depreciate at an extra $5 million per year, the Net property, plant, and equipment would decrease by $5 million each year. Over the course of one year, the net value of these assets would be reduced by $5 million, resulting in a decrease in Total Assets and Stockholders' Equity by the same amount. Therefore, the new balance sheet would show Net property, plant, and equipment as $116 million, and Total Assets and Stockholders' Equity would be adjusted accordingly.

Use the Table for the Question(s)below