Question

Bricker Graphies is a privately held company specializing in package labels. Representatives of the firm have just returned from Switzerland, where a Swiss firm is ma ring a custom-made high speed, color labeling machine. Confidence is high that the new machine will help rescue Bricker from sharply declining profitability. Bricker's chief operating officer Don Benson, has been under fire for not reaching the company's performance goals of achieving a rate of return on assets of at least 12%. The afternoon of his return from Switzerland, Benson called Susan Sharp into his office. Susan is Bricker's Controller. Benson: I wish you had been able to go. We have some accounting issues to consider. Sharp: I wish I'd been there, too. I understand the food was marvelous Whate the accounting issues? Benson: They discussed accepting our notes at the going rate for face amount of $12.5 million. We also discussed financing with stock Sharp: I thought we agreed: debt is the way to go for us now Benson: Yes, but I've been thinking. We can issue shares for a total of 10 million. The labeler is made and doesn't have a gred selling price, but the domestic labelen we considered a tund m i sure would help our rate of return we keep set base as low as Dossih Required: 1. How will Benson's plan affect the return meas Vha accounting is the proposathi 3. Who would be affected if the proposal is implemented