(Solution) - Pharmaceutical manufacturer Eli Lilly announced in the third qua -(2025 Original AI-Free Solution)

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Pharmaceutical manufacturer Eli Lilly announced in the third quarter of 2009 that it was taking a $425 million restructuring charge due to the sale of its Tippecanoe Laboratories unit. Of the total expense, the company indicated that $364 million was related to ?non-cash? asset impairment charges, with $61 million coming from severance packages for certain Tippecanoe employees. The third quarter 2009 statement of cash flows (operating section) contains a line item added back to net income for ?other, net? in the amount of $364 million.
REQUIRED:
a. Provide the entry made by Lilly to record the charge.
b. Explain why the statement of cash flow contained the $364 million entry.
c. Assume Lilly?s tax rate for 2009 was 26 percent. Compute the tax savings related to the charge.