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Discuss the effect of postponing an equipment purchase on a company's set of financial statements

Discuss the effect of postponing an equipment purchase on a company's set of financial statements (do not assume that the postponement would affect revenues or any operating costs other than depreciation and interest). Be sure to include the impact on the company's balance sheet, income statement, and statement of cash flows. Also discuss your opinion as to whether the company should act now or postpone. What do you think would be better for stockholders?

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Dear Student,

Thank you for using BM.
Below are my answers.

Sincerely,
Anna Liza Gaspar

ANSWERS

In the OTA's own words as required by BM.

A postponement of the purchase of piece of equipment delays the transfer of current asset, cash in particular, to long term asset, property, plant and equipment in particular. This means that the cash flow used by investing activities is much lower; however the ...

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