Analyzing and Interpreting Restructuring Costs and Effects Hewlett-Packard, Inc. reports the following footnote disclosure (excerpted) in its 2012 10-K relating to its 2012 restructuring program.

• Fiscal 2012 Restructuring PlanOn May 23, 2012, HP adopted a multi-year restructuringplan (the 2012 Plan) designed to simplify business processes, accelerate innovation anddeliver better results for customers, employees and stockholders. HP estimates that it willeliminate approximately 29,000 positions in connection with the 2012 Plan through fiscal year2014, with a portion of those employees exiting the company as part of voluntary enhancedearly retirement (EER) programs. HP expects to record aggregate charges of approximately$3.7 billion through the end of HPs 2014 fiscal year as accounting recognition criteria are met.Of that amount, HP expects approximately $3.1 billion to relate to the workforce reductions andthe EER programs and approximately $0.6 billion to relate to other items, including data centerand real estate consolidation. Due to uncertainties associated with attrition and the acceptancerates of future international EER programs, the total expected headcount reductions could varyas much as 15% from our estimates. We could also experience similar variations in the totalexpense of the 2012 Plan.
• HP recorded a charge of approximately $2.1 billion in the fiscal year of 2012 relating to the2012 Plan. This amount included costs for EER plans in the United States and Canada of $41million of stock-based compensation expense for accelerated vesting of stock-based awardsheld by participating EER employees and a special termination benefit (STB) expense of $126million. As of October 31, 2012, HP had eliminated approximately 11,700 positions as partof the 2012 Plan. The $2.1 billion charge also includes $105 million for data center and realestate consolidation, of which $56 million related to asset impairments. The cash paymentsassociated with the 2012 Plan are expected to be paid out through fiscal 2015.
• Fiscal 2010 AcquisitionsIn connection with the acquisitions of Palm, Inc. (Palm) and3Com Corporation (3Com) in fiscal 2010, HPs management approved and initiated plansto restructure the operations of the acquired companies, including severance for employees,contract cancellation costs, costs to vacate duplicative facilities and other items. The totalexpected combined cost of the plans is $101 million, which includes $33 million of additionalrestructuring costs recorded in the fourth quarter of fiscal 2011 in connection with HPs decisionto wind down the webOS device business. The Palm and 3Com plans are now closed with nofurther restructuring charges anticipated. The unused accrual in the amount of $13 million wascredited to restructuring expense in fiscal year 2012.
• Fiscal 2010 Enterprise Services Business Restructuring PlanOn June 1, 2010, HPsmanagement announced a plan to restructure its ES business, which includes the ITO and ABSbusiness units. The multi-year restructuring program includes plans to consolidate commercialdata centers, tools and applications. The total expected cost of the plan that will be recorded asrestructuring charges is approximately $1.0 billion, and includes severance costs to eliminateapproximately 8,200 positions and infrastructure charges. During the first quarter of fiscal 2012,HP reduced the severance accrual by $100 million and recognized additional infrastructurerelated charges of $104 million. The majority of the infrastructure charges were paid out duringfiscal 2012 with the remaining charges expected to be paid out through the first half of fiscal 2015.

The adjustments to the accrued restructuring expenses related to all of HPs restructuring plansdescribed above for the twelve months ended October 31, 2012, were as follows:

Fiscal 2012 Plan
Severance and EER	$ --	$ 1,986	$ (315)	$ (1,073)[1]	$ 597
Infrastructure and other	--	105	(26)	(68)	11
Total 2012 Plan	--	2,090	(341)	(1,141)	608
Fiscal 2010 acquisitions	59	(13)	(27)	(9)	10
Fiscal 2010 ES Plan:
Severance	493	(100)	(146)	(20)	227
Infrastructure	3	176	(141)	(37)	1
Total 2010 ES Plan	496	76	(287)	(57)	228
Fiscal 2009 Plan	--	7	(9)	2	--
Fiscal 2008 SB/EDS Plan:
Severance	--	5	(5)	--	--
Infrastructure	258	101	(171)	(7)	181
Total HP/EDS Plan	258	106	(176)	(7)	181
Total restructuring plan	$ 813	$ 2,266	$ (840)	$ (1,212)	$ 1,027

1. Using the financial statement effects template, show the effects on financial statements of the (1) 2012 restructuring charge of $2,266 million, and (2) 2012 cash payment of $840 million.

BALANCE SHEET (in $ millions)

TRANSACTION CASH ASSET + NONCASH ASSETS = LIABILITIES + CONTRIBUTED CAPITAL + EARNED CAPITAL

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INCOME STATEMENT

REVENUES - EXPENSES = NET INCOME

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