Business, 07.07.2021 18:40 xdpugx0

Compu-Lowe Corp. recently created an ESOP. The company issued 200,000 new shares of stock at $50 per share, which it sold to the ESOP. The ESOP borrowed $10 million to purchase the newly issued shares from the company. The financial institution was willing to lend the money to the ESOP, because Compu-Lowe Corp. signed a guarantee for the loan. The firm used the money from the ESOP to repurchase its shares on the open market at $50 per share. How will Compu-Lowe Corp.’s guarantee of the $10 million loan be reflected on the company’s balance sheet?
a- The company’s guarantee of the loan is considered an off-balance sheet liability of $10 million.
b- The company will increase its cash balance by $10 million.
c- The company will increase its total liabilities by $10 million.

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Compu-Lowe Corp. recently created an ESOP. The company issued 200,000 new shares of stock at $50 per...

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