Choose the correct. Which of the following is not a liability that has priority in a liquidation?a. Administrative expenses incurred during the liquidation.b. Salary payable of $1,250 per person owed to 26 employees.c. Payroll taxes due to the federal government.d. Advertising expense incurred before the company became insolvent but not recorded until after the order of relief.

Choose the correct. Which of the following is not a liability that has priority in a liquidation?a. Administrative expenses incurred during the liquidation.b. Salary payable of $1,250 per person owed to 26 employees.c. Payroll taxes due to the federal government.d. Advertising expense incurred before the company became insolvent but not recorded until after the order of relief.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter23: Corporate Restructuring

Section: Chapter Questions

Problem 21QTD

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Which of the following is not a liability that has priority in a liquidation?a. Administrative expenses incurred during the liquidation.b. Salary payable of $1,250 per person owed to 26 employees.c. Payroll taxes due to the federal government.d. Advertising expense incurred before the company became insolvent but not recorded until after the order of relief.
Which of the following is not a liability that has priority in liquidation? Group of answer choices Administrative expenses incurred during liquidation Taxes due to the government Accounts payable to suppliers Salaries payable to employees
For each of the following subsequent (post-balance-sheet) events, indicate whether a company should (a) adjust the financial statements, (b) disclose in notes to the financial statements, or (c) neither adjust nor disclose. ______ 1. Settlement of federal tax case at a cost considerably in excess of the amount expected at year-end. ______ 2. Introduction of a new product line. ______ 3. Loss of assembly plant due to fire. ______ 4. Sale of a significant portion of the company's assets. ______ 5. Retirement of the company president. ______ 6. Prolonged employee strike. ______ 7. Loss of a significant customer. ______ 8. Issuance of a significant number of shares of common stock. ______ 9. Material loss on a year-end receivable because of a customer's bankruptcy. ______ 10. Hiring of a new president. ______ 11. Settlement of prior year's litigation against the company (no loss was accrued). ______ 12. Merger with another company of comparable size.
At the time of corporate liquidation, which of the following unsecured claims with priority shall be settled first? a. Liability for taxes b. Liability for corporate torn c. Liability for employee benefits d. Liability for corporate crime
When does the liquidation basis of accounting first have to be applied to financial statements of a liquidating entity to be viewed as in conformity with U.S. GAAP? a. When an involuntary bankruptcy petition is approved by the court. b. When liquidation is imminent. c. When the first asset is sold. d. At least 90 days before the final asset is sold.
Sunshine Limited, in preparation of its December 31, 2020, financial statements, is attempting to determine theproper accounting treatment for each of the following situations.1. As a result of uninsured accidents during the year, personal injury suits for $350,000 and $60,000 have beenfiled against the company. It is the judgement of Sunshine’s legal counsel that an unfavourable outcome isunlikely in the $60,000 case but that an unfavourable verdict approximating $250,000 will probably result in the$350,000 case.2. Sunshine Limited owns a subsidiary in a foreign country that has a book value of $5,725,000 and an estimatedfair value of $9,500,000. The foreign government has communicated to Sunshine its intention to expropriate theassets and business of all foreign investors. On the basis of settlements other firms have received from this samecountry, it is virtually certain that Sunshine will receive 40% of the fair value of its properties as final settlement.3. Sunshine’s chemical…
The following events occurred for Scythian, Inc. between its December 31, 2022 year-end and the issuance of its financial statements on February 28, 2023: Event 1: The company settled a disagreement with the Internal Revenue Service regarding income taxes payable for 2021. Scythian had accrued income taxes payable of $3,000,000. The settlement requires payment of $3,200,000. Event 2: The company’s 3rd largest customer abruptly declared bankruptcy because of the CEO’s embezzlement of company funds. At year-end, the customer owed Scythian $1,200,000 but had made a payment of $400,000 in January 2023. Event 3: Employees at one of the company’s largest plants went on strike in January 2023. The strike is expected to cost the company between $500,000 and $1,000,000 in lost revenue. What is the net effect of these events on 2022 net income?
Choose the correct. Which of the following is the minimum limitation necessary for filing an involuntary bankruptcy petition in connection with a company that has 57 unsecured creditors?a. The signature of 12 creditors to whom the debtor owes at least $14,775 in unsecured debt.b. The signature of six creditors to whom the debtor owes at least $18,250 in unsecured debt. c. The signature of three creditors to whom the debtor owes at least $15,775 in unsecured debt.d. The signature of nine creditors to whom the debtor owes at least $23,225 in unsecured debt.
An entity had the following liabilities on December 31, 2020: Accounts Payable 55,000 Unsecured notes, 8% due 7/1/2021 400,000 Accrued expenses 35,000 Contingent liability 450,000 Deferred tax liability 25,000 Senior bonds, 7%, due 3/31/2021 1,000,000 The contingent liability is an accrual for possible loss on a P1,000,000 lawsuit filed against the entity. The legal counsel expects the suit to be settled in 2021 and has estimated that the entity will be liable for damages in the range of P450,000 to P750,000. The deferred tax liability is expected to reverse in 2021. What amount should be reported on December 31, 2020 for current liabilities? None of theseNone of these 940,000940,000 1,490,0001,490,000 1,515,0001,515,000…
A company going through a Chapter 7 bankruptcy has the following account balances: How much will be paid to each of the following? Salaries payable Accounts payable Note payable Bonds payable
Northwest Company determined that it has an obligation relating to employees' rights to receive compensation for future absences attributable to employees’ services already rendered. The obligation relates to rights that vest, and payment of the compensation is probable. The amounts of Northwest's obligations as of December 31 are reasonably estimated as follows: Vacation pay P110,000 Sick pay 80,000 In its December 31 financial position, what amount should Northwest report as its liability for compensated absences?
Polska SA, in preparation of its December 31, 2019, financial statements, is attempting todetermine the proper accounting treatment for each of the following situations.1. As a result of uninsured accidents during the year, personal injury suits for €350,000 and €60,000have been filed against the company. It is the judgment of Polska's legal counsel that an unfavorableoutcome is unlikely in the €60,000 case but that an unfavorable verdict approximating €250,000 willprobably result in the €350,000 case.2. Polska Corporation owns a subsidiary in a foreign country that has a book value of €5,725,000 andan estimated fair value of €9,500,000. The foreign government has communicated to Polska itsintention to expropriate the assets and business of all foreign investors. On the basis of settlementsother firms have received from this same country, it is virtually certain that Polska will receive 40%of the fair value of its properties as final settlement.3. Polska's chemical product division…