Determine the transactions that qualify as noncash investing and financing activities.

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Chapter 12, Problem 12.7ME

To determine

Determine the transactions that qualify as noncash investing and financing activities.

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Recently, Abercrombie & Fitch has been implementing a turnaround strategy since its sales had been falling for the past few years (11% decrease in 2014, 8% in 2015, and just 3% in 2016.) One part of Abercrombie's new strategy has been to abandon its logo-adorned merchandise, replacing it with a subtler look. Abercrombie wrote down $20.6 million of inventory, including logo-adorned merchandise, during the year ending January 30, 2016. Some of this inventory dated back to late 2013. The write-down was net of the amount it would be able to recover selling the inventory at a discount. The write-down is significant; Abercrombie's reported net income after this write-down was $35.6 million. Interestingly, Abercrombie excluded the inventory write-down from its non-GAAP income measures presented to investors; GAAP earnings were also included in the same report. Question: What impact would the write-down of inventory have had on Abercrombie's expenses, Gross margin, and Net income?

Recently, Abercrombie & Fitch has been implementing a turnaround strategy since its sales had been falling for the past few years (11% decrease in 2014, 8% in 2015, and just 3% in 2016.) One part of Abercrombie's new strategy has been to abandon its logo-adorned merchandise, replacing it with a subtler look. Abercrombie wrote down $20.6 million of inventory, including logo-adorned merchandise, during the year ending January 30, 2016. Some of this inventory dated back to late 2013. The write-down was net of the amount it would be able to recover selling the inventory at a discount. The write-down is significant; Abercrombie's reported net income after this write-down was $35.6 million. Interestingly, Abercrombie excluded the inventory write-down from its non-GAAP income measures presented to investors; GAAP earnings were also included in the same report. Question: What impact would the write-down of inventory have had on Abercrombie's assets, Liabilities, and Equity?

Answer 2

Question

Chapter 12, Problem 12.7ME

To determine

Determine the transactions that qualify as noncash investing and financing activities.

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Check out a sample textbook solution

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Answer 3

Question

Chapter 12, Problem 12.7ME

To determine

Determine the transactions that qualify as noncash investing and financing activities.

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Answer 4

Question

Chapter 12, Problem 12.7ME

To determine

Determine the transactions that qualify as noncash investing and financing activities.

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Answer 5

Chapter 12, Problem 12.7ME

To determine

Determine the transactions that qualify as noncash investing and financing activities.

Answer 6

Chapter 12, Problem 12.7ME

To determine

Determine the transactions that qualify as noncash investing and financing activities.

Answer 7

Chapter 12, Problem 12.7ME

To determine

Determine the transactions that qualify as noncash investing and financing activities.

Answer 8

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Answer 11

Ch. 12 - Prob. 1Q Ch. 12 - Prob. 2Q Ch. 12 - Prob. 3Q Ch. 12 - What are the major categories of business...Ch. 12 - Prob. 5Q Ch. 12 - Prob. 6Q Ch. 12 - Prob. 7Q Ch. 12 - Prob. 8Q Ch. 12 - Compare the two methods of reporting cash flows...Ch. 12 - Prob. 10Q

Determine the transactions that qualify as noncash investing and financing activities.

Solution Summary: The author explains noncash investing and financing activities. Purchase of building with mortgage payable is a financing activity because there is no outflow or inflow of cash.

Determine the transactions that qualify as noncash investing and financing activities.

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Chapter 12 Solutions