Copyright © 2014 by Dr. Wendy Tietz. This work is licensed under a Creative Commons Attribution- NonCommercial 3.0 Unported License. How will a $37 million expansion to retool an assembly plan impact GM's financial statements? Original blog posting (July 29, 2014)

Copyright © 2014 by Dr. Wendy Tietz. This work is licensed under a Creative Commons Attribution- NonCommercial 3.0 Unported License. General Motors considering $37 million expansion to assembly plant Lansing, Michigan, assembly plant currently manufactures Buick Enclave, Chevrolet Traverse, and GMC Acadia GM may retool plant to manufacture Chevrolet Camero GM has applied for tax incentives from the City of Lansing

Copyright © 2014 by Dr. Wendy Tietz. This work is licensed under a Creative Commons Attribution- NonCommercial 3.0 Unported License. Question 1 Would the $37 million be treated as an expense or as a capital expenditure? Why?

Copyright © 2014 by Dr. Wendy Tietz. This work is licensed under a Creative Commons Attribution- NonCommercial 3.0 Unported License. Question 2 What impact will the $37 million have on GM’s 2015 income statement? Explain.

Copyright © 2014 by Dr. Wendy Tietz. This work is licensed under a Creative Commons Attribution- NonCommercial 3.0 Unported License. Question 3 What impact will the $37 million have on GM’s 2015 balance sheet? Explain.

Copyright © 2014 by Dr. Wendy Tietz. This work is licensed under a Creative Commons Attribution- NonCommercial 3.0 Unported License. Question 4 Now think about GM’s 2016 financial statements. Assuming that GM makes the $37 million investment in 2015, how will its income statement and balance sheet be impacted in 2016? Explain.

Copyright © 2014 by Dr. Wendy Tietz. This work is licensed under a Creative Commons Attribution- NonCommercial 3.0 Unported License. Question Recap 1.Would the $37 million be treated as an expense or as a capital expenditure? Why? 2.What impact will the $37 million have on GM’s 2015 income statement? Explain. 3.What impact will the $37 million have on GM’s 2015 balance sheet? Explain. 4.Now think about GM’s 2016 financial statements. Assuming that GM makes the $37 million investment in 2015, how will its income statement and balance sheet be impacted in 2016? Explain.

Copyright © 2014 by Dr. Wendy Tietz. This work is licensed under a Creative Commons Attribution- NonCommercial 3.0 Unported License. For additional news stories to use in the accounting classroom, see the Accounting in the Headlines blog at Related video resources can be found at Questions or comments? Contact Dr. Wendy Tietz at