Harnischfeger Corporation

Harnischfeger's corporate recovery plan consists of four approaches including (1) change in senior management, (2) cost reduction at break-even point, (3) company's business rearrangement, and (4) debt restructuring and capital It consists of. Reorganization At a glance these changes seem to have increased Hernish Feger's financial performance from $ 3.49 per share in 1983 to earnings per share of $ 1.28 per share in 1984. In addition, Harnischfeger seems to have achieved most of the expected results for each of the four changes, as shown below.

Established in 1884, Harnischfeger has two major departments. . Of the $ 15,176,000 in net income, $ 11,005,000 or $ 0.93 per share is due to the cumulative effect of depreciation on straight-line method by accelerating financial reporting. This change is applied retrospectively to all assets subject to the Acceleration Act. This change affected factories and machinery facilities in the United States. The company previously used Acceleration Method for financial and tax reporting. The company makes this change consistent with the accounting practices used in the industry and claims that its impact is not important

a. Harnischfeger registers final sales of products purchased from Kobe as net sales, not gross profit per unit. We also believe that financial statements of some subsidiaries (not all) will also increase net sales. 2. What is the impact of the change in depreciation method on the 1984 report's earnings? How will this change affect profits over the next few years? a. In the case of depreciation of certain types of assets, Harnischfeger adjusts the depreciation policy to the straight-line method based on the accelerated method. This allows you to increase net profit after retroactive correction. This change will increase net income over the next few years, but depreciation will continue for several more years since the straight-line method.