As a consequence of the Covid-19 Amadeus Corporation (a leading travel technology company) is suffering from financial d

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As A Consequence Of The Covid 19 Amadeus Corporation A Leading Travel Technology Company Is Suffering From Financial D 1 (228.49 KiB) Viewed 36 times

As a consequence of the Covid-19 Amadeus Corporation (a leading travel technology company) is suffering from financial distress as it can be seen from its balance sheet: YEAR O YEAR 1 YEAR 2 Current assets Fixed assets Total assets $100,000 100,000 $200,000 $100,000 100,000 $200,000 $100,000 100,000 $200,000 S 0 $100,000 $250,000 Total debt Equity Common stock Retained earnings Total equity Total debt and equity 200,000 0 200,000 $200,000 200,000 -100,000 100,000 $200,000 200,000 -250,000 -50,000 $200,000 Two scenarios are possible for Amadeus in Year 3: In scenario 1, Year 3 for Amadeus is expected to result in an additional $150,000 operating loss. In scenario 2, Year 3 is expected to be a "breakout” year for Amadeus when higher sales and lower costs owing to economies of scale are forecasted to produce operating profits of $250,000 in Year 3. Total assets are expected to remain at $200,000 under either scenario. Total debt will be increased to finance additional operating losses. Operating profits will be used to reduce total debt. Instructions: 1. Show Amadeus's balance sheets under both scenarios;