INTERCO is a manufacturer and retailer of a broad line of consumer products, including London Fog, Florsheim Shoes, Converse, Ethan Allen Furniture, and Lane Furniture. During Year 9, INTERCO became the target of an unfriendly takeover attempt. In an effort to defend itself against the takeover, INTERCO declared a special dividend of $1.4 billion. It financed the dividend by issuing long-term debt and preferred stock. INTERCO planned to dispose of certain businesses to repay a portion of this debt. Exhibits 6.22, 6.23, and 6.24 present balance sheets, income statements, and statements of cash flows, respectively, for INTERCO. The first column of each exhibit shows the amounts as reported for Year 9. The second column shows the restated amounts for Year 8 to reflect the decision to dispose of certain businesses that the company had previously included in continuing operations. The third column shows the amounts originally reported for Year 8. The income tax rate is 35 percent.
Required
a. Refer to the balance sheets of INTERCO in Exhibit 6.22. Why is the restated amount for total assets for Year 8 of $1,830,400 different from the originally reported amount for total assets of $1,985,586?
b. Refer to the income statement of INTERCO in Exhibit 6.23. Why is the originally reported and restated net income the same ($145,003) when each of the company's individual revenues and expenses decreased on restatement?
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c. Refer to the statement of cash flows for INTERCO in Exhibit 6.24. Why is the restated amount of cash flow from operations for Year 8 of $94,447 less than the originally reported amount of $117,774?
d. If the analyst wished to analyze changes in the structure of assets and equities between Year 8 and Year 9, which columns and which amounts in Exhibit 6.22 would the analyst use? Explain.
e. If the analyst wished to compare the change in operating performance between Year 8 and Year 9, which columns and which amounts in Exhibit 6.23 would the analyst use? Explain.
f. Describe briefly how INTERCO's actions during Year 9 might thwart an unfriendly takeover attempt.

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EXHIBIT 6.21 General Dynamics Corporation Statement of Cash Flows (amounts in millions) (Problem 6.16) Year 9 as Reported Year 8 as Restated inYear9 Annual Report Year 8 as Originally Reported Operations $ 206 140 Depreciation and Amortization (Increase) Decrease in Accounts Receivable.. Increase) Decrease in Contracts in Process (76) Increase) Decrease in Other Current Asset... Increase (Decrease) in Accounts Payable and $ 374 303 (91) 237 13 56 (83) 262 469 s 629 (66) (41) s 285 Cash Flow from Continuing Operations....... 202 288 Cash Flow from Discontinued Operations Cash Flow from OperationsS 490 673 Investing Proceeds from Sale of Discontinued Operations.... Capital Expenditures... Purchase of Marketable Securities. Other s 184 1,039 (18) 5 184 (29) (307) (125) (307) 56 Cash Flow from Investing. 928 S(149) 149) Financing (61) Repayment of Debt..454) (960) (55) (42) (42) Cash Flow from Financing. Change in Cash. 120) $ 404 109 S 513 S1412) s (53) s 407 100 07 507 Cash End of Year ...S 513 EXHIBIT 6.2 INTERCO Balance Sheet (amounts in thousands) Problem 6.17) Year 8 as Restated in Year9 Annual Report Year 8 as Originally Reported Year 9 as Reported s 23,299 310,053 514,193 31,882 486,657 805,095 35,665 Cash and Marketable Securities 77,625 329,299 490,967 41,625 Prepayments 24,984 521,644 $1,394,173 317,238 118,989 $1-830,400 269,315 266,191 Total Current Assets Property, Plant, and Equipment, net. Other Assets.... 1,285,888 327,070 $ 1,359,299 479.499 146,788 $ 736,268 1,986,837 373,343 299,140 61.766 $ 734,249 S 256,740 1,179,964 Long-Term Debt Total Liabilities Contributed Capital Retained Earnings.. Treasury Stock.. S 579,063 s 256,740 1,179,964 (185,367) S1,251,337 $1,830,400 2,781,052 S 339,656 (1,208,250) $1,251.337 $1.985,586 Total Liabilities and Shareholders' Equity$1.775,302 EXHIBIT 6.23 INTERCO Income Statement (amounts in thousands) (Problem 6.17) Year 8 as Year 8 as Year 9 as Reported Restated in Year9 Annual Report Originally Reported $1,995,974 13,714 $2,009,688 $1,288,748 493,015 29,188 85,303 $1,896,254 $ 113,434 31,569 S 145,003 $3,341,423 29,237 $3,370,660 $2,284,640 799,025 33,535 108,457 $3,225,657 $ 145,003 Other Income 18,943 S1,335,678 537,797 141,735 19,977 $2,035,187 old.... Selling and Administrative.. Income Taxes Income from Discontinued Operations .74,432 Net Income $ 145,003