ADVANCED FINANCIAL ACCOUNTING IA
12th Edition
ISBN: 9781260545081
Author: Christensen
Publisher: MCG
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Chapter 20, Problem 20.2E
(a)
To determine
Introduction: Chapter 11 of the US Bankruptcy Code deals with reorganization of the debtor’s business, that is, its affairs, debts and assets. Entities file Chapter 11 proceedings if they require time to restructure their debts. This form of bankruptcy proceedings is the most complex of all.
A recovery analysis for the plan of reorganization of T.
(a)
To determine
Introduction :
The journal entries for the discharge of debt and the restructuring of the common equity
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Students have asked these similar questions
The Larisa Company is exiting bankruptcy reorganization with the following accounts:
Book Value
Fair Value
Receivables
$
87,000
$
104,000
Inventory
207,000
224,000
Buildings
307,000
414,000
Liabilities
307,000
307,000
Common stock
337,000
Additional paid-in capital
34,000
Retained earnings (deficit)
(77,000
)
The company's assets have a $787,000 reorganization value. As part of the reorganization, the company's owners transferred 70 percent of the outstanding stock to the creditors.
Record the entry to reduce additional paid in capital balance to correct figure, to close out gain account, and to eliminate deficit.
Ma
Mannheim Corporation is ready to emerge from Chapter 11 bankruptcy under a reorganization plan accepted by all parties. Mannheim's balance sheet shows:
Various assets
$2,000,000
Prepetition liabilities, fully secured
$400,000
Prepetition liabilities subject to compromise
1,360,000
Postpetition liabilities
820,000
Common stock
200,000
Retained deficit
(780,000)
TOTAL
$2,000,000
TOTAL
$2,000,000
There are no excess assets. The present value of future cash flows from the reorganized company's operating assets is $1,900,000 The creditors represented by the prepetition liabilities subject to compromise agree to take $580,000 in 7 percent notes payable plus 70 percent of the common stock as settlement. The old shareholders will have 30 percent of the common stock.
After reorganization, Mannheim's retained earnings balance is
Select one:
a. $150,000
b. $(70,000)
c. $500,000
d. $0.
Journal entries
Logan Corp. has incurred losses from operations for many years. At the recommendation of the newly hired president, the board of directors noted to implement a quasi-reorganization, subject to the stockholders' and creditors' approval. Immediately, prior to the quasi-reorganization, on June 30, 2016, Logan's balance sheet was as follows: AssetsCurrent assets P1,375,000 Property, plant and equipment 3,375,000 Other noncurrent assets 500,000Total assets P5,250,000 Liabilities and Stockholders' Equity Total liabilities P1,500,000Ordinary shares, P10 par value 4,000,000 Additional paid-in capital 750,000Deficit (1,000,000)Total liabilities and stockholders' equity P5,250,000The stockholders and creditors approved the quasi-reorganization effective July 1, 2016, to be accomplished by a reduction in property, plant, and equipment (net) P875,000, a reduction in other noncurrent assets of P375,000, and a reduction in par value from P10 to P5.
Chapter 20 Solutions
ADVANCED FINANCIAL ACCOUNTING IA
Ch. 20 - What are the nonjudicial actions available to a...Ch. 20 - What is the difference between a Chapter 7 action...Ch. 20 - Prob. 20.3QCh. 20 - What is usually included in the plan of...Ch. 20 - Prob. 20.5QCh. 20 - Prob. 20.6QCh. 20 - Prob. 20.7QCh. 20 - Prob. 20.8QCh. 20 - How is the statement of affairs used in planning...Ch. 20 - What are the financial reporting responsibilities...
Ch. 20 - Prob. 20.11QCh. 20 - Creditors' Alternatives The creditors of Lost Hope...Ch. 20 - Prob. 20.3CCh. 20 - Prob. 20.1.1ECh. 20 - Prob. 20.1.2ECh. 20 - Prob. 20.1.3ECh. 20 - Prob. 20.1.4ECh. 20 - Prob. 20.1.5ECh. 20 - Prob. 20.2ECh. 20 - Prob. 20.3.1ECh. 20 - Prob. 20.3.2ECh. 20 - Prob. 20.3.3ECh. 20 - Prob. 20.3.4ECh. 20 - Prob. 20.3.5ECh. 20 - Chapter 7 Liquidation Penn Inc.'s assets have the...Ch. 20 - Prob. 20.5ECh. 20 - Chapter 11 Reorganization During the recent...Ch. 20 - Prob. 20.7PCh. 20 - Chapter 7 Liquidation, Statements of Affairs...Ch. 20 - Prob. 20.9P
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