InterTech Corporation recorded pretax restructuring charges of $1,033.5 million in 2017. The charges consisted of asset write-downs of $681 million, costs associated with exit or disposal activities of $99 million, and employee severance costs of $253.5 million. The company paid $108 million cash to settle these restructuring charges during the year (2017).
At year end, the restructuring accrual associated with these charges was:
A) $ 1,033.5 million
B) $ 326.0 million
C) $ 253.5 million
D) $ 244.5 million
E) There is not enough information to determine the amount.

Question

Quizplus · Accepted Answer

The restructuring accrual at year-end is calculated as the total restructuring charges minus the cash paid. Thus, $1,033.5 million - $108 million = $925.5 million. However, the question asks for the accrual associated with the charges, which is the remaining unpaid portion of the severance costs, $253.5 million - $108 million = $145.5 million, plus the exit or disposal activities, $99 million, totaling $244.5 million.

InterTech Corporation Recorded Pretax Restructuring Charges of $1,033