Use the table for the question(s)below.
-The above diagram shows a balance sheet 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 be adjusted accordingly.
D)Long-Term Liabilities would fall to $172 million,and Total Liabilities and Stockholders' Equity would be adjusted accordingly.

Question

Use the table for the question(s)below. 
-The above diagram shows a balance sheet 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 be adjusted accordingly. 
D)Long-Term Liabilities would fall to $172 million,and Total Liabilities and Stockholders' Equity would be adjusted accordingly.

Quizplus · Accepted Answer

Since the long-term assets are judged to depreciate at an extra $5 million per year, the net property, plant, and equipment would decrease by $5 million each year. Therefore, after one year, the net property, plant, and equipment would be $121 million instead of $126 million. This means that Total Assets and Stockholders' Equity would decrease accordingly, resulting in a new Total Assets and Stockholders' Equity of $232 million instead of $237 million. So, the correct option is B.

Use the Table for the Question(s)below