
Ultimate access to all questions.
Future purchase obligation payments: €10,000,000
Present value of future purchase obligation payments: €8,000,000
To properly reflect the company's leverage, using constructive capitalization, the analyst should adjust the company's reported financial statements by:
A
adding €8,000,000 to the assets and adding €8,000,000 to the liabilities.
B
adding €10,000,000 to the assets and adding €10,000,000 to the liabilities.
C
adding €8,000,000 to the assets, adding €10,000,000 to the liabilities and subtracting €2,000,000 from equity.