Answered: SG Company is bankrupt and has…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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SG Company is bankrupt and has undergone corporate liquidation. Presented below is its statement of financial position before the start of liquidation (see attached photo):
·       Liquidation expenses amounting to P600,000 were paid.
·       The loan payable is secured by the Machinery with fair value of P300,000.
·       The mortgage payable is secured by the building.
·       At the end of liquidation, the holder of loan payable received P340,000.
Using the information of SG Company, what is the fair value of the building?

300,000
Machinery 500,000 Salaries Payable
1,200,000 Income Tax
Cash
Accounts Payable 100,000
200,000
300,000
Building
Payable
Loan Payable
Mortgage Payable 500,000
Contributed Capital 800,000
400,000
Deficit
(300,000)

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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