Adverse financial and operating circumstances warrant that Solid Company should undergo a quasi-reorganization at year-end. Inventory with a fair value of P2,000,000 is currently recorded at cost of P2,500,000. * Plant assets with a fair value of P7,000,000 are currently recorded at P8,500,000, net of accumulated depreciation: Individual shareholders contribute P4,000,000 to create additional capital to facilitate the quasi-reorganization. No new shares are issued. * The par value of the share is reduced from P25 to P5. The entity reported the following shareholders' equity prior to the quasi-reorganization: Share capital, P25 par, 100,000 shares outstanding Share premium 2,500,000 1,750,000 Retained earnings (deficit) (3,000,000) After the quasi-organization, what amount should be reported as share premium? a. 2,750,000 b. 3,250,000 c. 3,750,000 d. 1,750,000 000.000.0 QU

Adverse financial and operating circumstances warrant that Solid Company should undergo a quasi-reorganization at year-end. Inventory with a fair value of P2,000,000 is currently recorded at cost of P2,500,000. * Plant assets with a fair value of P7,000,000 are currently recorded at P8,500,000, net of accumulated depreciation: Individual shareholders contribute P4,000,000 to create additional capital to facilitate the quasi-reorganization. No new shares are issued. * The par value of the share is reduced from P25 to P5. The entity reported the following shareholders' equity prior to the quasi-reorganization: Share capital, P25 par, 100,000 shares outstanding Share premium 2,500,000 1,750,000 Retained earnings (deficit) (3,000,000) After the quasi-organization, what amount should be reported as share premium? a. 2,750,000 b. 3,250,000 c. 3,750,000 d. 1,750,000 000.000.0 QU

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter12: Auditing Long-lived Assets And Merger And Acquisition Activity

Section: Chapter Questions

Problem 37RQSC

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FFF Company had sustained heavy losses over a period of time and conditions warrant that the entity should undergo a quasi-reorganization on December 31, 2020.-Inventory with cost of P6,500,000 was recorded on December 31, 2020 at the market value of P6,000,000-Property, Plant and Equipment were recorded on December 31, 2020 at P12,000,000, net of accumulated depreciation. The sound value was P8,000,000-On December 31, 2020, the share capital is P7,000,000 consisting of 700,000 shares with par value of P10, the share premium is P1,600,000, and the deficit in retained earnings is P900,000-The par value of the share is to be reduced from P10 to P5Immediately after the quasi-reorganization, what is the total shareholders' equity?
Assuming that the quasi reorganization shall be accomplished as follows: Property, plant and equipment are to be reduced to their fair market value of P800,000. Inventories are to be written down by P50,000. • Unaccrued obligation shall be recognized at P150,000. • The par value of ordinary Shares will be reduced to P5. 1. What is the balance of the retained earnings account as of 31 December 2019? Assuming that the quasi reorganization shall be accomplished as follows: Property, plant and equipment are to be reduced to their fair market value of P800,000. Inventories are to be written down by P50,000. • Unaccrued obligation shall be recognized at P150,000. • The par value of ordinary Shares will be reduced to P5. 2. What is the balance of the retained earnings account as of 31 December 2019?
A statement of realization and liquidation has been prepared for the RESTLESS Corporation. The following information is available:Assets to be realized- P60,000 Liabilities assumed- P50,000Assets acquired- P40,000 Liabilities not liquidated- P40,000Assets realized- P55,000 Liabilities to be Liquidated- P80,000Assets not realized- P15,000 Liabilities liquidated- P60,000Supplementary credits- P110,000 Supplementary Charges- P97,000How much is shareholders’ equity, beg. assuming that the cash balance, ending amounted to P50,000? CHOICES: P92,000 P55,000 P118,000 P12,000
A statement of realization and liquidation has been prepared for the RESTLESS Corporation. The following information is available:Assets to be realized- P60,000 Liabilities assumed- P50,000Assets acquired- P40,000 Liabilities not liquidated- P40,000Assets realized- P55,000 Liabilities to be Liquidated- P80,000Assets not realized- P15,000 Liabilities liquidated- P60,000Supplementary credits- P110,000 Supplementary Charges- P97,000How much is shareholders’ equity, beg. assuming that the cash balance, ending amounted to P50,000? a. P118,000 b. P12,000 c. P92,000 d. P55,000
A statement of realization and liquidation has been prepared for the RESTLESS Corporation. The following information is available:Assets to be realized- P60,000 Liabilities assumed- P50,000Assets acquired- P40,000 Liabilities not liquidated- P40,000Assets realized- P55,000 Liabilities to be Liquidated- P80,000Assets not realized- P15,000 Liabilities liquidated- P60,000Supplementary credits- P110,000 Supplementary Charges- P97,000How much is the net increase (decrease) in retained earnings?
Dexter Company has sustained heavy losses over a period time and conditions warrant that Dexter undergo a quasi re-organization at December 31, 2019. Selected balance sheet items prior write down and quasi-reorganization are as follows: • Property, plant and equipment were recorded in the accounting records at December 31, 2019, at P12,000,000, net of accumulated depreciation. The recoverable value is P8,000,000. • Stockholders' equity on December 31, 2019 was as follows: Ordinary share, par value P10 per share authorized, issued and outstanding 700,000 shares- P7,000,000; Share premium P1,600,000; Retained earnings (deficit)- (P600,000) • Under the terms of the quasi re-organization, the par value of the ordinary share is to be reduced from P10 per share to P5 per share Immediately after the quasi-reorganization has been accomplished, the total stockholders' equity should be:
Lee Corp. owned the following assets when it came out of a Chapter 11 bankruptcy: Inventory – Book value $215,000; fair value $180,000 Land --- Book value $95,000; fair value $160,000 Buildings --- Book value $330,000; fair value $345,000 Equipment --- Book value $410,000; fair value $215,000. Lee Corp. had a fresh start reorganization value of $1,250,000. Required: What amount of goodwill should have been recognized in recording the reorganization?
ABC Company is in a capital deficiency position and is considering the possibility of liquidation. An analysis of the assets and liabilities of the entity is provided: Assets at net realizable value (pledged against liabilities of P150,000) 250,000 Assets at net realizable value (pledged against liabilities of P260,000) 100,000 Assets at net realizable value (not pledged against any liabilities) 160,000 Liabilities with priority 85,000 Unsecured creditors 400,000 Round off the estimated recovery percentage to XX.XX%, if needed. How much is the estimated payment to partially secured creditors?
TJH Company has sustained heavy losses over a period time and conditions warrant that TJH undergo a quasi re-organization at December 31, 2019. Selected balance sheet items prior write down and quasi-reorganization are as follows:• Property, plant and equipment were recorded in the accounting records at December 31, 2019, at P12,000,000, net of accumulated depreciation. The recoverable value is P8,000,000.• Stockholders’ equity on December 31, 2019 was as follows: Ordinary share, par value P10 per share authorized, issued and outstanding 700,000 shares- P7,000,000; Share premium- P1,600,000; Retained earnings (deficit)- (P600,000)• Under the terms of the quasi re-organization, the par value of the ordinary share is to be reduced from P10 per share to P5 per shareImmediately after the quasi-reorganization has been accomplished, the total stockholders’ equity should be:
ABC Company has sustained heavy losses over a period time and conditions warrant that ABC undergo a quasi re-organization at December 31, 2019. Selected balance sheet items prior write down and quasi-reorganization are as follows:• Property, plant and equipment were recorded in the accounting records at December 31, 2019, at P12,000,000, net of accumulated depreciation. The recoverable value is P8,000,000.• Stockholders’ equity on December 31, 2019 was as follows: Ordinary share, par value P10 per share authorized, issued and outstanding 700,000 shares- P7,000,000; Share premium- P1,600,000; Retained earnings (deficit)- (P600,000)• Under the terms of the quasi re-organization, the par value of the ordinary share is to be reduced from P10 per share to P5 per shareImmediately after the quasi-reorganization has been accomplished, the total stockholders’ equity should be:
Logan Corp. has incurred losses from operations for many years. At the recommendation of the newly hired president, the board of directors noted to implement a quasi-reorganization, subject to the stockholders' and creditors' approval. Immediately, prior to the quasi-reorganization, on June 30, 2016, Logan's balance sheet was as follows: Assets Current assets P1,375,000 Property, plant and equipment 3,375,000 Other noncurrent assets 500,000 Total assets P5,250,000 Liabilities and Stockholders' Equity Total liabilities P1,500,000 Ordinary shares, P10 par value…
On January 1, 20x1, AAA Co. acquired all of the identifiable assets and assumed all of the liabilities of BBB, Inc. by paying cash of ₱2,000,000. On this date, the identifiable assets acquired and liabilities assumed have fair values of ₱3,200,000 and ₱1,800,000, respectively.AAA Co. has estimated restructuring provisions of ₱400,000 representing costs of exiting the activity of BBB, costs of terminating employees of BBB, and costs of relocating the terminated employees.Requirement: Compute for the goodwill (gain on bargain purchase).