Consider a pharmaceutical comp

Consider a pharmaceutical company with $30m worth of inventory in a drug that improves vision. A regulatory body has just issued a ruling that due to findings in recent clinical studies, the drug can no longer be sold because its side effects are too severe. Which best describes the change in the company’s balance sheet that would result? a. Inventory would decrease by $30m, the cash account would increase by $30m as an offset, and the book value of equity would decrease by $30m. b. Inventory would decrease by $30m, the cash account would increase by $30m as an offset, and the book value of equity would remain unchanged. c. Inventory would decrease by $30m, the cash account would remain unchanged, and the book value of equity would remain unchanged. d. Inventory would decrease by $30m, the cash account would remain unchanged, and the book value of equity would decrease by $30m.

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