8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter9: Metric-analysis Of Financial Statements

Section: Chapter Questions

Problem 9.23E: Unusual income statement items Assume that the amount of each of the following items is material to...

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AccountingQ&A LibraryDistressed Corporation is undergoing liquidation. Relevant information as of January 1, 20x1 is shown below: ASSETS Carrying Amount Net Realizable Value Cash P250,000 P300,000 Accounts Receivable 150,000 355,649 Equipment-net 600,000 200,000 Land 1,700,000 1,500,000 TOTAL ASSETS P2,700,000 P2,355,649 LIABILITIES Carrying Amount Settlement Amount Accounts Payable P1,000,000 P1,000,000 Salaries Payable 500,000 500,000 Notes Payable 800,000 805,234 Loan Payable 800,000 800,000 TOTAL LIABILITIES P3,100,000 P3,105,234 EQUITY Share Capital P1,600,000 Retained Earnings (2,000,000) Capital Deficiency (400,000) TOTAL LIABILITIES & EQUITY P2,700,000 Additional Information: • Administrative expenses amounting to P180,744 are expected to be incurred during the liquidation process. • The equipment is pledged to the loan payable. • The land is pledged to the notes payable. QUESTIONS: 1. How much are the total free assets? _____________ 2. How much are the unsecured liabilities with priority? _____________ 3. How much are the total unsecured liabilities without priority? _____________ 4. How much are the net free assets? _____________ 5. What is the estimated deficiency? _____________ 6. What is the estimated recovery percentage? _____________ 7. What is the amount paid to unsecured creditors without priority? _____________ 8. What is the amount paid to partially secured creditors?

Distressed Corporation is undergoing liquidation. Relevant information as of January 1, 20x1 is shown below: ASSETS Carrying Amount Net Realizable Value Cash P250,000 P300,000 Accounts Receivable 150,000 355,649 Equipment-net 600,000 200,000 Land 1,700,000 1,500,000 TOTAL ASSETS P2,700,000 P2,355,649 LIABILITIES Carrying Amount Settlement Amount Accounts Payable P1,000,000 P1,000,000 Salaries Payable 500,000 500,000 Notes Payable 800,000 805,234 Loan Payable 800,000 800,000 TOTAL LIABILITIES P3,100,000 P3,105,234 EQUITY Share Capital P1,600,000 Retained Earnings (2,000,000) Capital Deficiency (400,000) TOTAL LIABILITIES & EQUITY P2,700,000 Additional Information: • Administrative expenses amounting to P180,744 are expected to be incurred during the liquidation process. • The equipment is pledged to the loan payable. • The land is pledged to the notes payable. QUESTIONS: 1. How much are the total free assets? _______ 2. How much are the unsecured liabilities with priority? _ 3. How much are the total unsecured liabilities without priority? _ 4. How much are the net free assets? _ 5. What is the estimated deficiency? _ 6. What is the estimated recovery percentage? _ 7. What is the amount paid to unsecured creditors without priority? _______ 8. What is the amount paid to partially secured creditors?

Question

Distressed Corporation is undergoing liquidation. Relevant information as of January 1, 20x1 is shown below:
ASSETS
Carrying
Amount
Net Realizable
Value
Cash P250,000 P300,000
Accounts Receivable 150,000 355,649
Equipment-net 600,000 200,000
Land 1,700,000 1,500,000
TOTAL ASSETS P2,700,000 P2,355,649
LIABILITIES
Carrying
Amount
Settlement
Amount
Accounts Payable P1,000,000 P1,000,000
Salaries Payable 500,000 500,000
Notes Payable 800,000 805,234
Loan Payable 800,000 800,000
TOTAL LIABILITIES P3,100,000 P3,105,234
EQUITY
Share Capital P1,600,000
Retained Earnings (2,000,000)
Capital Deficiency (400,000)
TOTAL LIABILITIES & EQUITY P2,700,000
Additional Information:
• Administrative expenses amounting to P180,744 are expected to be incurred during the liquidation process.
• The equipment is pledged to the loan payable.
• The land is pledged to the notes payable.
QUESTIONS:
4. How much are the net free assets? _____________
5. What is the estimated deficiency? _____________
6. What is the estimated recovery percentage? _____________

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