Hewlett-Packard, Inc. reports the following footnote disclosure (excerpted) in its 2015 10-K regarding its 2012 restructuring program.

Fiscal Year 2015 Restructuring Plan In connection with the Separation, on September 14, 2015, HP's Board of Directors approved an investment and cost savings proposal that includes a restructuring plan (the "2015 Plan") to be implemented during fiscal year 2018. As part of the Under Plan 2015, HP expects approximately 33,300 employees to leave the company by the end of 2018. These headcount reductions are primarily associated with the ES segment. Changes in the workforce will vary by country, depending on local legal requirements and consultation with employee works councils and other employee representatives, as appropriate. HP estimates that it will incur pre-tax aggregate charges through fiscal 2018 of approximately $2.9 billion in connection with the 2015 Plan, which is estimated to cost HP Inc. approximately $280 million. The estimated total charges as a result of the workforce reductions are approximately $2.4 billion and the estimated total charges for the real estate consolidation are approximately $506 million.

Fiscal 2012 Restructuring Plan On May 23, 2012, HP adopted a multi-year restructuring plan (the "2012 Plan") designed to simplify business processes, accelerate innovation, and deliver better results for customers, employees, and shareholders. As of October 31, 2015, HP eliminated 55,800 positions in connection with the 2012 Plan, with a portion of those employees leaving the company as part of the voluntary enhanced early retirement ("EER") programs in the US and in some other countries. HP recognized $5.5 billion in total aggregate charges in connection with the 2012 Plan, with $4.9 billion related to headcount reductions, including EER programs, and $589 million related to infrastructure, including data center and real estate consolidation and other items. Indemnity and infrastructure related cash payments associated with the 2012 Plan are expected to be paid through fiscal year 2021. As of October 31, 2015, the 2012 Plan is considered complete. HP does not expect any additional charges to this plan.

Other Plans The restructuring plans initiated by HP in fiscal years 2008 and 2010 were substantially completed as of October 31, 2015. The infrastructure-related cash payment and severance payments associated with the other plans are expected to be paid during the fiscal year 2019.

$ million	Balance October 31, 2014	charges	Payments in cash	Other Adjustments and non-cash Settlements	Balance October 31, 2015
Plan for the financial year 2015
Breaking off	$0	$390	$0	$0	$390
Infrastructure and others	0	1	(1)	0	0
Total Plan 2015	0	391	(1)	0	390
Plan for the financial year 2012
Unemployment and EER	955	566	(1,101)	(78)	342
Infrastructure and others	98	74	(120)	(4)	48
Total Plan 2012	1,053	640	(1,221)	(82)	390
Other plans
Breaking off	7	(4)	(1)	(1)	1
Infrastructure	54	(10)	(20)	0	24
All other plans	61	(14)	(21)	(1)	25
Total restructuring plans	$1,114	$1,017	$(1,243)	$(83)	$805
Reflected in consolidated balance sheets
cumulative restructuring	$898				$689
Other passives	$216				$116

(a) Which of the following is NOT an example of a common non-monetary charge associated with corporate restructuring activities?

Inventory revaluations

Severance pay paid to employees

Fixed asset depreciation

Charges for impairment of intangible assets

(b) Using the financial statement effects template, show the financial statement effects of (1) the 2015 restructuring charge of $1,017 million, and (2) the 2015 cash payment of $1,243 million.

Use negative signs with the answers, when appropriate.

	Balance Sheet (in millions of $)
Transaction	cash asset	+	non-cash assets	=	Passive	+	contributed Capital	+	cattle capital
(1)	Answer		Answer		Answer		Answer		Answer
(2)	Answer		Answer		Answer		Answer		Answer

Statement of income
Revenue	-	Bills	=	Net Income
Answer		Answer		Answer
Answer		Answer		Answer

(c) Suppose that instead of accurately estimating the anticipated restructuring charge in 2015, the company overestimated it by $30 million.

(1) How would this overstatement affect the 2015 financial statements?

You overstate spending and understate income before taxes by $30 million. The restructuring liability on the 2015 balance sheet will be overstated by $30 million.

You understate spending and overstate pretax income by $30 million. The restructuring liability on the 2015 balance sheet will be overstated by $30 million.

You overstate spending and understate income before taxes by $30 million. The restructuring liability on the 2015 balance sheet will be understated by $30 million.

It understates the expense and understates the pretax income by $30 million. The restructuring liability on the 2015 balance sheet will be overstated by $30 million.

(2) How would this overstatement affect the financial statements in 2016 when severance costs are paid in cash?

Cash paid out in 2016 will be greater than the 2015 accrual. Any excess (the $30 million) would increase expenses (decrease profits) in 2016.

The 2015 overstatement will not have an effect on the 2016 balance sheet or income statement.

Cash paid out in 2016 will be less than the 2015 accrual. Any excess (the $30 million) would increase expenses (decrease profits) in 2016.

Cash paid out in 2016 will be less than the 2015 accrual. Any excess (the $30 million) would reduce expenses (increase profits) in 2016.