Which company is most likely closest to filing for bankruptcy in the near term? A) Company A which shows $0 in profit B) Company B which shows $0 in cash C) Company C which shows $0 in inventory
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Which company is most likely closest to filing for bankruptcy in the near term?
- A) Company A which shows $0 in profit
- B) Company B which shows $0 in cash
- C) Company C which shows $0 in inventory
Step by step
Solved in 2 steps
- Choose the correct. For a company emerging from bankruptcy, how are liabilities (other than deferred income taxes) reported?a. At their historical value.b. At zero because of fresh start accounting.c. At the present value of the future cash flows.d. At the negotiated value less all professional fees incurred in the reorganization.For a company emerging from bankruptcy, how are liabilities (other than deferred income taxes) reported?a. At their historical value.b. At zero because of fresh start accounting.c. At the present value of the future cash flows.d. At the negotiated value less all professional fees incurred in the reorganization.Choose the correct. Which of the following is necessary for a company to use fresh start accounting?a. The previous owners must hold at least 50 percent of the stock of the company when it emerges from bankruptcy.b. The reorganization value of the company must exceed the value of all assets.c. The reorganization value of the company must exceed the value of all liabilities.d. The original owners must hold less than 50 percent of the stock of the company when it emerges from bankruptcy.
- Which of the following is necessary for a company to use fresh start accounting?a. The previous owners must hold at least 50 percent of the stock of the company when it emerges from bankruptcy.b. The reorganization value of the company must exceed the value of all assets.c. The reorganization value of the company must exceed the value of all liabilities.d. The original owners must hold less than 50 percent of the stock of the company when it emerges from bankruptcy.What accounting is made for professional fees incurred during a bankruptcy reorganization?a. They must be expensed immediately.b. They must be capitalized and written off over 180 months or less.c. They must be capitalized until the company emerges from the reorganization.d. They are either expensed or capitalized, depending on the nature of the expenditure.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?
- Choose the correct. The New England Company has a debt to a bank of $55,000. The company is currently being liquidated and believes that between $12,000 and $20,000 will be paid on that debt. According to the liquidation basis of accounting, what amount is reported for this liability?a. $12,000b. $16,000c. $20,000d. $55,000A statement of financial affairs created for an insolvent corporation that is beginning the process of liquidation discloses the following data (assets are shown at net realizable values):a. This company owes $13,000 to an unsecured creditor (without priority). How much money can this creditor expect to collect? b. This company owes $120,000 to a bank on a note payable that is secured by a security interest attached to property with an estimated net realizable value of $90,000. How much money can this bank expect to collect?A statement of financial affairs created for an insolvent corporation that is beginning the process of liquidation discloses the following data. The assets are shown at net realizable values. Assets pledged with fully secured creditors $ 212,000 Fully secured liabilities 156,000 Assets pledged with partially secured creditors 386,000 Partially secured liabilities 502,000 Assets not pledged 306,000 Unsecured liabilities with priority 208,400 Accounts payable (unsecured) 396,000 The company owes $9,000 on an account payable to an unsecured creditor (without priority). How much money can this creditor expect to collect? The company owes $112,000 to a bank on a note payable that is secured by a security interest attached to property with an estimated net realizable value of $86,000. How much money can the bank expect to collect? a. Expected amount by creditor b. Expected amount by bank
- The COCO Manufacturing Company has been forced into bankruptcy as of April 30, 2022. The statement of financial position on that date shows: ASSETS:Cash P 2,700Accounts Receivable 39,350Notes Receivable 18,500 Inventories 87,850Prepaid Expenses 950 Land and Buildings 61,250Equipment 48,800 Retained Earnings (30,850)Total ? LIABILITIES AND EQUITY: Accounts Payable P52,500 Notes Payable - PNB 15,000 Notes Payable - Suppliers 51,250 Accrued Wages 1,850 Accrued Taxes 4,650 Mortgage Bonds Payable 90,000 Common Stock - P 100 par 75,000 Total ? Additional Information:▪Accounts Receivable of P 16,110 and Noted Receivable of P 12,500 are expected to be…The COCO Manufacturing Company has been forced into bankruptcy as of April 30, 2022. The statement of financial position on that date shows: ASSETS:Cash P 2,700Accounts Receivable 39,350Notes Receivable 18,500 Inventories 87,850Prepaid Expenses 950 Land and Buildings 61,250Equipment 48,800 Retained Earnings (30,850)Total ? LIABILITIES AND EQUITY: Accounts Payable P52,500 Notes Payable - PNB 15,000 Notes Payable - Suppliers 51,250 Accrued Wages 1,850 Accrued Taxes 4,650 Mortgage Bonds Payable 90,000 Common Stock - P 100 par 75,000 Total ? Additional Information:▪Accounts Receivable of P 16,110 and Noted Receivable of P 12,500 are expected to be…APA Company Owes the ABC Corporation P60,000 on account, which is secured by accounts receivable with a book value of P50,000. The unsecured portion is considered a claim under the bankruptcy law, the company has filed for bankruptcy. Its statement of affairs lists the accounts receivable securing the ABC account with an estimated realizable value of P45,000. If the dividend to general unsecured creditors is 80%, how much can ABC expect to receive?
