ADVANCED ACCOUNTING(LL) W/CONNECT
13th Edition
ISBN: 9781260282382
Author: Hoyle
Publisher: MCG
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Textbook Question
Chapter 13, Problem 40P
Kansas City Corporation holds three assets when it comes out of Chapter 11 bankruptcy:
| Book Value | Fair Value | |
| Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | $ 86,000 | $ 50,000 |
| Land and buildings . . . . . . . . . . . . . . . . . . . . . | 250,000 | 400,000 |
| Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 123,000 | 110,000 |
The company has a reorganization value of $600,000.
- a. Describe the rules to determine whether to apply fresh start accounting to Kansas City.
- b. If fresh start accounting is appropriate, how will this company’s assets be reported?
- c. If a
Goodwill account is recognized in a reorganization, where should it be reported? What happens to this balance?
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Students have asked these similar questions
Ataway Company has severe financial difficulties and is considering filing a bankruptcy petition. At this time, it has the following assets and liabilities. The assets are stated at net realizable value.
Assets (pledged against debts of $70,000) . . . . . . . . . . . . . . . . $116,000Assets (pledged against debts of $130,000) . . . . . . . . . . . . . . . . . 50,000Other assets . . . . . . . . . . . . . . . 80,000Liabilities with priority . . . . . . . 42,000Other unsecured creditors . . . 200,000
In a liquidation, how much money would be paid on the partially secured debt?
A 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):Assets pledged with fully secured creditors . . . . . . . . . . . . . . . . $220,000Fully secured liabilities .. . . . 160,000Assets pledged with partially secured creditors . . . . . . . . . . . . . . . 390,000Partially secured liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 510,000Assets not pledged . . . . . . 310,000Unsecured liabilities with priority . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182,800Accounts payable (unsecured) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400,000a. 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…
When AAA Company filed for liquidation with the Securities and Exchange Commission, it prepared the
following statement of financial position:
Current Assets (net realizable value, P50,000)
Land and Building (fair value, P240,000)
Goodwill (fair value, 0)
Total Assets
Accounts Payable
Mortgage Payable (secured by land & building)
Ordinary share
Accumulated profits
Total Liabilities and Equity
b. 56.25%
c. 50.00%
P 80,000
200,000
d. 43.75%
40,000
P320,000
P160,000
200,000
100,000
What percentage of their claims are the unsecured creditors likely to get?
a. 100%
(140,000)
P320,000
Chapter 13 Solutions
ADVANCED ACCOUNTING(LL) W/CONNECT
Ch. 13 - What does the term insolvent mean?Ch. 13 - Why should a company monitor the reporting of...Ch. 13 - Prob. 3QCh. 13 - Prob. 4QCh. 13 - Prob. 5QCh. 13 - Prob. 6QCh. 13 - What federal legislation governs most bankruptcy...Ch. 13 - What are the primary objectives of a bankruptcy...Ch. 13 - A bankruptcy case can begin with either a...Ch. 13 - A bankruptcy court enters an order for relief. How...
Ch. 13 - What is the difference between fully secured...Ch. 13 - Prob. 12QCh. 13 - Prob. 13QCh. 13 - What is the difference between a Chapter 7...Ch. 13 - What is the purpose of a statement of financial...Ch. 13 - In a bankruptcy liquidation, what actions does the...Ch. 13 - A trustee for a company that is being liquidated...Ch. 13 - If a company is not required to follow U.S. GAAP,...Ch. 13 - Prob. 19QCh. 13 - In determining whether a company needs to use the...Ch. 13 - In following the liquidation basis of accounting,...Ch. 13 - How does a company report its assets when the...Ch. 13 - What does the term debtor in possession mean?Ch. 13 - Who can develop reorganization plans in a Chapter...Ch. 13 - Prob. 25QCh. 13 - Prob. 26QCh. 13 - In a bankruptcy proceeding, what is a cram down?Ch. 13 - Prob. 28QCh. 13 - During reorganization, how should a companys...Ch. 13 - Prob. 30QCh. 13 - Prob. 31QCh. 13 - Under what conditions does a company that is...Ch. 13 - Prob. 33QCh. 13 - Prob. 34QCh. 13 - What are the objectives of the bankruptcy laws in...Ch. 13 - Prob. 2PCh. 13 - Prob. 3PCh. 13 - In a bankruptcy, which of the following statements...Ch. 13 - Prob. 5PCh. 13 - An involuntary bankruptcy petition must be filed...Ch. 13 - An order for relief creates an automatic stay that...Ch. 13 - Prob. 8PCh. 13 - Which of the following is the minimum limitation...Ch. 13 - On a statement of financial affairs, how are...Ch. 13 - What is a debtor in possession? a. The holder of a...Ch. 13 - How are anticipated administrative expenses...Ch. 13 - Prob. 13PCh. 13 - Which of the following is not an expected function...Ch. 13 - What is an inherent limitation of the statement of...Ch. 13 - What is a cram down? a. An agreement about the...Ch. 13 - Prob. 17PCh. 13 - Prob. 18PCh. 13 - Prob. 19PCh. 13 - How are assets to be reported when the liquidation...Ch. 13 - The New England Company has a debt to a bank of...Ch. 13 - On a balance sheet prepared for a company during...Ch. 13 - Which of the following is not a reorganization...Ch. 13 - What accounting is made for professional fees...Ch. 13 - Which of the following is necessary for a company...Ch. 13 - Prob. 26PCh. 13 - For a company emerging from bankruptcy, how are...Ch. 13 - The Walston Company is to be liquidated and has...Ch. 13 - Prob. 29PCh. 13 - Prob. 30PCh. 13 - Prob. 31PCh. 13 - Mondesto Company has the following debts:...Ch. 13 - A statement of financial affairs created for an...Ch. 13 - A company preparing for a Chapter 7 liquidation...Ch. 13 - Olds Company declares Chapter 7 bankruptcy. The...Ch. 13 - A company going through a Chapter 7 bankruptcy has...Ch. 13 - Pumpkin Company is going through bankruptcy...Ch. 13 - Prob. 38PCh. 13 - Prob. 39PCh. 13 - Kansas City Corporation holds three assets when it...Ch. 13 - Prob. 41PCh. 13 - Prob. 42PCh. 13 - Prob. 43PCh. 13 - Prob. 44PCh. 13 - The following balance sheet has been prepared by...Ch. 13 - Prob. 46PCh. 13 - Prob. 47PCh. 13 - The following balance sheet has been produced for...Ch. 13 - Prob. 49PCh. 13 - Prob. 50PCh. 13 - Prob. 51PCh. 13 - Prob. 52PCh. 13 - Holmes Corporation has filed a voluntary petition...
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