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337 views17 pagesCorporate Liquidation
corp liquis
Uploaded by
rcasagum.educres2425Copyright
© © All Rights Reserved
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/ 17
1
Tey
CORPORATE LIQUIDATION
— CORPORATE LIQUIDATION
rations are not successful in its business undertaking and suffers
some Estimated NRV= Loss
IBook Value < Estimated NRV= Gain
——<—$<——— op Bia
Net
Book Realizable _ Gain
Value Value (loss)
Accounts
eC
aod Tea ain2s0 | boon
Merchandise 140,000 92,750 (47,250)
Prepaid Expenses 4,375 = (4,375)
Building (net) 603,750 630,000 26,280
oon 96,250 * (96,250)
87,495)
Estimated Net Gain (loss) on Realization
The Statement of Realizat ree
es zation and Liquidation
{ts statment that shows the actual Activity of the trustee in liquidating 8
of the sanut®- lt Provides the information on how the trustee realized the 0580
purpose wat snd liquidate the obligation of the company. The statement
maplishagte the bankruptcy court and interested cred er o
statement oferrh oe stee. This statement is usually: accompanied BY
"eeipisand disbursements and statement of estate
The statement of
paaete anol zation and liquidation is composed of three sectioM®
2 Liability secion
3. Revenue and expense sec
ection
eee
go ne company ahah ema tae et ee
the period pperiey of the beginning ol.
wires mma ip
_ ee een po
«pron thd Sepa
Eabaaing ana’ fe ot
Tiabilities Liquidated Liabilities to be liquidated
Liabilities not Liquidated | Liabilities Assumed
a Liabilities to be Liquidated - it represents the total Liabilities measure
took value that needs to be: paid by the company at the beginning of
period.
1k Liabilities Assumed ~it represents new liabilities ncured during the sod
and it is not yet recorded in the statement of financial position:
c: Uatitieg egpiaansd Pie +pecaecta the Uebiinanid Soine Oe Se
at
4. Liabilities not Liquidated — it represents th
the end of the period.
REVENUE AND EXPENSE SECTION
‘Supplementary Charges ae
eriong Pane
Qycclufing, lod an teatvarion a
= suf daadin ¢ — it represents the exPEPS
, dating the period. Cea" LOS
Supplementary Credits - it repre
d¥H fyove on ath wen
BS exduding Mot
Watalh', npaceney — ‘CORPORATE
A
BOO 2g oe
ENT OF Senay 1 BO RO HAE LN 269
PREPARING THE sraTeMl REALIZATION Fon: On February 1, 2081, the statement at RATE UQUOATIN 249
ULES Ton ay ror or to liquidation shows the flown nal Poon ABC
ve tions “ ASSETS ‘LIABILI a
aunty, cash TramsactiON® sas a debit to cash section and a cs 180,000 Accounts Payatie AN? CAPFTAL
FT cash seceipts Fe FTF tem or Supplementary Credits ite Cashes Receivable 70,000 Notes Payable 300,000
wight, fotmeasets ees ™ WE neemeceivable 100,000 Salaries 150,000
rd, to the Aer ite sh Noon 250,000 Loans Payette” "0.000
ti eign amen are epetedas ced tocash section ang aot 000 able "so
i sash disburse’ ted item or Supplemey and as supplies M
cae ingest o Sop tary Charps > fee ie 1 500-000
either ris more appropriate. = a ing, nel 000,
ca fe opt pale, nel 50,000
cash Tansetio x Eoawll 200,000
eat Transom and Acerued Income are reported as a debit tg otal 2,455,000" Total oe
“fies Fo ore to Supplementary Credit item, Aste OH
me, as! HAL amaatee has discovered the following transactions a:
Ro eine Es we pedantry | 2am nen ve
Purchases uy Charges and credit o Liabilities Assumed, iiierest on notes feceivable were aceed amounting to P10,00
sao eae f. Interest payable on loan, payable amounting to P5,000 was not recorded,
avg ape statement realization and liquidation is typically prepared in T-acesins ites were incurred to the government amounting to P15 000.
° sae eet side and credits on the right side of the account, Te ‘he folowing are the activities of the trustee
si debi teren the debit and credit totals represents the gain or loss
ere ef liqudation during the reporting period. Lf the total debits ar y
‘ain ota edit, the diference is considexed.a net lose forthe prod
alec ie total debits art_less than the total credite, the diferens iy 4
i the perioc 3.
‘The total net gain or loss during the period may be summarized by consolidating :
the results ofthe three sections (theassets, liabilities and revenue and expenses,
‘The statement of realization and liquidation is presented like this:
Statement of Realization and Liquidation
5
6
i.
8
9
‘Assets to be Realized ‘Assets Realized
Assets Acquired Assets not Realized Ret
1
Liabilities Liquidated Liabilities to be liquidated
bilities not Liquidated _| Liabilities Assumed.
Spleen hn
=
Yetta
Supplementary Credits,
nly 60,000 were collected from the accounts receivable, The remaining
balance were written-off.
Mates receivable and interest receivable were realized for P80,000,
Sone of the inventory were sold for 90,000 and expends P2,000 to sell the
inventory,
[nnd and building were sold for P1,600,000. The proceeds from sales were
ised to pay the loans payable and interest payable,
Equipment were sold for P120,000,
Goodwill was written-off.
Salaries and tax payable were paid.
Supplies were sold for P1,500
‘Administrative expense of P10,000 were paid
quirements: Prepare the following:
‘The journal entry in the books of the trusts
and liabilities of ABC Corporation.
‘The journal entries in the books of the trust
liabilities of ABC Corporation.
‘The journal entries in the books of the trustes
liquidation of assets and liabilities.
Statement of Realization and Liquidation
Statement of Cash Receipts and Disburse
Statement of Estate Deficit
ee to record the transfer of assets
ee to record the new assets and
to record the realization and
ments in TrusteesbiP
ee | CCoRPORAT
shah OE ee
& nal entries inthe books ofthe PORATED 254
1 trustee to record th cae
jutions in the Books of oe ON Tiows: e transfer, ‘que Joumn of assets and liabilities, te to record
fot journal ene? {he ration is as follows: any, 3 Majdation of : icra
“labilities of :
” Gash
Cash 1. Gstate Deficit
Secounts Receivable “recounts Receivable 10000
Notes Receivable
cash
2 20,000
nes Eatate Deficit ;
Prepaid expense Interest Receivable - new 30,000
sastting met Notes Receivable 4
puilding, ne!
Equipment, net cash (90K = 24) ea
Goodwill Estate Defi aon
Estate DEH inventory (60% x 250K) aes
counts Payable
Notes Payable a Cash 1,600,000
Notes Pay
Salaries Payable Estate Defic
ans Payable Tan
eas Pa Building
Notes:
Notes: sats and liabilities of the corporation will be recorded at book
value in the books of the trustee i
Loan Payable
Interest Payable - new
Cash,
Tash
Estate Deficit
‘Equipment, 150,000
5
«The stockholders’ equity of the corporation will be recorded either as
‘otate equity (redit balance) or estate deficit (debit balance)
%_ Estate Equity
Goodwill
Salaries Payable
Tax Payable - new
2, The joumalentries in the books of the trustee to record the new assets and
liabilities of ABC Corporation is as follows:
a. Interest Receivable - new 10,000 Cash
Estate Det & Cash
Estate Deficit
Estate Deficit ‘Supplies
Interest Payable - new 9 Estate Equity amin rave
Cash
© Estate Deficit
Taxes Payable ~ new
pses after the assumsion
Any subsequent gains, losses and liquidation e*PsTEC Te ircty tthe
ofthe trustee of the estate of the corporation
estate deficit account.
+ The unrecos
ded assets and liabilities wil be identified as @ me™ SE
snes nur toe cous ee
teed ts ee aowmunt) In the illustration, the estate deficit 220
is recorded as cet nt in the books of trustee, the capital mon we
4. The Statement of Realization and Ligdstre
The conventional format of the state
Aeficit (liabilities book value is sF°* ext page as follows:
Oe —— a cracuurenecr tata
CORPORATE ny
Hoy
Sy
ape SENT OF RELIED AND LIQUIDATION
sre EELIZATION
rEMy MONTH ENDED IONBRAURY 28, 201
FOR
ASSETS
erat nce i
ati Noo
‘pssts 10 BE. ‘Accounts Receivable
Attounts Rece¥@B° 499,999 Notes & Interest Receivable £0,009
teers Receivable 3801000 aventory 20,000,
tnvertoy i000 Land and Building 16889
supplies 500,000 Equipment a
and act 1,000,000 Goodwill 20,009
Bling net 150,000 Supplies
seapen = 399.00 100
caer FIs000 Total =e
Assets not Realized
het 10,000 Inventory
Interest Receivable 100,000
LIABILITIES.
Tibiites Liquidated Liabilities to be Liquidated
teens Payatle 800,000 Accounts Payable 500,000
Interest Payable 5,000 Notes Payable 1,500,000
Salaries Payable 150,000. Salaries Payable 150,000
Taxes Payable 15,000_ Loans Payable 800,000
Total ‘000 Total 7,950,000,
Liabilities not Liguidated Liabilities Assumed
‘Accounts Payable” 500,000 Interest Payable 5,000
Notes Payable 1,500,000_ Taxes Payable 15,000
Tota 2,000,000" Total 20,000
SEINE AND ExPmses _____——
tpPlementary Charges ‘Supplementary Credits
Administrative Ey 0,000
a xp. 10,000 Interest on notes receivable a
Trae Expense 15,000 Net Lose assis
os 8000
Teal aaa =
z as
285,000_ Total ae
oar OD
ative presentation of statement op oe LQUDATIN 253,
alte! na =
ae tea tke * tion and liquidation iy
yee
Joe tA nto AND LQcIOMon
seTA ‘MONTH ENDED FEBRAURY 28, 20
ate Deficit Pebraary 1, 20x1
(95,000
at an
eae Rel Too aos
ream pable andinterst 11000 Soro nang
150,000 ° 88,000
Inventory 000 (6,000
{nd and Building 1,500,000 1,600,000 100,000
Piuipment 10000 "120000 (snt69,
Gaol 000 rod
supplies 50005 (235,500)
Book Cash
isbilities Liquidated Value Payments
Habilidsterest Payable 805,000 805,000 .
Salaries payable 150,000. 150,000 :
Taxes payable 15,000 15,000 : 5
Revenue and Expenses
‘Administrative expenses paid (10,000,
Interest on notes receivable 10,000
Interest payable on loans (5.00)
Taxes payable 05,000) (20,000)
Estate Deficit, February 28, 20x1 50,500),
Statement of Affairs vs. Statement of Realization end Liquidstion
‘Statement oF Reainati on and
2 Tiguidation
weoals
TR Fie forma nate and E [T pase Se
‘esed on estimate rather than actual | Hidaion
sults, | ring of te |
ses ongoing poring oF
Wise
(is a Summary of the estimated [Tt provides {oS and is updated
res 8.
ults of a completed liquidation. [Sane ein os
‘Statement of Affairs CORPORA
‘cash Re
sratement of ciple oy aisbursement is present
5, Staten ofeash Foe ed below,
THON ISBURSEME!
asc CORPOPAT Ny, RECEIPTS AND 2) NTS
eATEMENT OF SEDRAURY 28, 2021
STATE yONTH ENDED
‘cash Balance ao ae 180,099
Add: Cash ReCPIT accounts Receivable 60,000
oleson fees andinterest Receivable 80,000
Coles ventory for cash 88,000
sale ofan and bul 1,600,000
Sale of Bquipment 120,000
sat sures, 15001909500
Tota gah Disbursements 2135,
less: Caph Ment of Loan and raterest 805,000
Parent of Salaries 130,000
Payment of axes 15,000
Papent of Administrative Expense 10,000 980,000
cash Balance, February 28 749,500
6, Statement of Estate Deficit
She statement of deficit is presented below
‘ABC CORPORATION
STATEMENT OF ESTATE DEFICIT
FOR THE MONTH ENDED FEBRAURY 28, 201
Estate Deficit, February 1 (495,000)
Net gun oss)on realization
‘Accounts Receivable written off (10,000)
ColecionafNaesandintrest receivable (30,000
ventory (62,000)
keg 8
Good write-off (30,000)
Supplies (200,000)
Total (3,500)
Administrative (235,500)
Intereston notes och’ (10,000)
Intereston loans 10,000
Taxes expense (5,000) 500)
Estate Defic 18,000) _ (255:
fict, February 28 ( feos
Uo
7
2: Recovery Percentage CORRE LUTON 255
passat Bio ine Statement of Sha angels
on jag information: akrupt Corporatio
oo aye
ivimated gains on realization ofassay
Eatimated losses on realization ofansety
Kaditional assets
agitional liabilities San
‘share Capital 2,400,000,
Deficit
sequined: Determine the recovery percentage of sharcholders
penta enti atria an
Barat su,
‘etional liabilities
A vets Available to Shareholders
Net dey Net assets at book value
parovery Percentage of shareholders
ttmeans that upon liquidation the shareholders shall only recover 80% of their
investment in the company. EXERCISES
rele the etter of your final answer
ition for volunta
) Filipino filed a petit 1Y insolve
fan, ng ge rae of PED for every beso oi, Te
a fom Bano iin nt
olds # teralized by equipment 1€ of \
collateralized BTC on this note receivable ig; /™°.
a1 et Be recover . P60,000
3 P40,000 @p24o00 “PA (ost) 4
fb) F700
has fieda petition forinsolvency. The winding up o
mom i de etn
Raco-s ais wl a
puberet
BV Realizable value
Assets 1,200,000 1,000,
Liities
Uieaure ibilties with priority £80,000 ston
Aly secured creditors 480,000 480,000
Partally secured creditors 160,000 160,000
without priorities 560,000 360,000
Unsecured iblities without p
Total 1,280,000 1,280,000
Unrecrded items
Dividend receivables 20,000
Interest payable 000
Estimated administrative expenses 40,000
What isthe estate equity (deficit) in the opening journal entry made by OF
receiver in ts books?
(108,000)
& 180,000)
Problem 3: The following data are provided by Gulong-Gulo Company
‘Assets at book value
Assets at esti
. P(308,000)
. P(68,000)
mated realizable valu aT
Liabilities at book value
Aly secured mortgage ad
¢nsecured accounts and notes payable 245,000
fed Dabilities
rarecord
Intereston banknotes
atimated administrative costs
‘copeningjournal entryin the books othe
ea and abilities: 'e torecordthe transfer
of ee) 980. «©. P88,000 )
39.2 ae
5 nO 108,500
« estimated deficiency presented in the statement
es, 000) Cy R025 ot alate
a 91136.500) P(LS7.500)
Iwata Corporation filed a voluntary ban
oplem 4: 1 ion Bleed las Cy petition tothe cout
Frogepeember 1) 2081, id the statement of affairs shows the toll
‘trormation lowing
Estimated
Book Realzale
ts Value Value
stele caged with fully secured creditors 730,000 925000
Assets Pedged with partially secured creditors 50,000 300,000
a 10,000 ett, a00
em 2,250,000 000,
Liabilities
Unsecured with priority 300
Rill secured liabilities td
Partially secured liabilities ot
Unsecured without priority
Assume thatall non-cash assetsare convertedtocashat theestinatedresiate
value and the corporation is liquidated.
out priority claims?
Req. 1: How much cash is available for unsecured without Pr oD eh
900,000 ‘. P6O0,000
"00,000 4. P700,000 pa
of partially secured creditors
Reg. 2: What is the expected recovery percentage of art °
2% 60% ¢. 65% «Tn!
b 87% 4.75%
vite
it decides ta
cy fom SEC an ities aval
Problem 8: LUX ‘bankrupts
fem 8: LUX Corp. files © ae
the company. The ee thas the following asset
XS statement of affairs: A
i CORPORA
TE Lay
ima
ates Payable of P210,000 =
ost ted ae 000 so
ast te pledged t0 ACC a
Other Asse abilities with Prony 20.9
Uasecue ees tout poo ise
ow much would be paid 1 partially secured creditors?
pea. ¢. P550,000)
hisoom & 222,000
B30
9 os mn sto sale fr UREEETEA Wh nd
priority claims? , P252,000
om &. P588,000
resem Tefllovingdata were avaableinthe statement fafa oft
Corporation
‘Shareholders equity
{oss on realization of assets
Eeumated administrative costs that have not
been entered in the accountingrecords 24.750
Unsecured liabilities with priority 35,000]
Unsecured liabilities without priority
Reg: What isthe expected recovery percentage of unsecured non-priority
creditors?
a 80% ©. 60%
b. 85% 4. 75%
Req 2; How much js the total fee assets?
a Pasa) ©. PA75,750
500,500 . P748,000
Problem 7: INSOLVENT 5d beioe
Lady ‘orp. had the following data_ascertaine
fae cm i book value of the assets were 250,000. ‘The book value of
fair value, theewmnae excess in the amount of P26,000 over its es
te prepaid tok value of P120,000, Included in the book value of the ae
‘an Ra expres otP1600 which was considered worthless ot
its book value porte 28 estimated fair value which was P15 en fe
sete lie ee a ne pe
cured by the inventories while the notes PY"
Gp 795,000 was. secured COFFE UAT 259
cant of by the equi
oad includes salaries and taxes in the saS™eRt Other tis
PRE ates noe
wnat is the amount ofthe ne fre assetay
9,500
32,000
. P93,000,
«4. P50,000
tis the estimated loss on asset realization?
©. P59,000.
4. P96,500
phat is the estimated recovery for the
oy for the partially secured creditors?
Rea 299 ©. P67,128
2 ton 4. P66, 962
vq 4 What isthe estimated Teovery percentage for the notes payie?
Ree fais ©. 95.90% oe
eee 4. 100.00%
‘the corporation has total assets with book value of P2,000,000 and
deficiency amounting to (P340,000.)
sercestment property with a book value of P500,000 and realizable vale
of P300,000 secured a loan payable amounting to P100,000
Inventory with a book value of P1,000,000 and realizable value of P100,00
secured a note payable amounting to P200,000,
1 Bienes nehid aha income tax payable amountedtoP100,000 and 4000,
respectively. ae
Req, 1: What is the amount received by
‘@. P100,000 PY
Problem 9: Gh any locatedat the cent
: Glued Company located at the cen
a technological changes occur, experiences to:
re fmie downturns and litigation a reste cout
inability to meet obligations as they CM. To nes under
ranted an order for relief. The company on gistributions will be made in a fa
ty the court regarding the adn
ty ta preliminary report. Presey
petore the start of liquidation;
Notes Payable
Wages Payable
Income tax Payable
Loan Payable
Mortgage payable
Contributed capital
Deficit
cash lent 3,750,000
Machinery & BaP 7200,000
Building
sages aca Ene wen oe
Tar eo'Ssp.00. The mortgage payable is fully secured by the es ated
eq 1: What is the amount of the total free assets?
a P1,020.000 c. P4,050,000
b P5170,000 &. P-7,500,00
the estimated gain (loss) on the realization of the building?
‘c. P(2,330,000)
. (6,080,000)
Req, 3: What is the estimated payment to all liabilities?
a 11,170.00 . P15,000,000
b. P7,420,000 . P8,920,000
Trotem 10 Sisiy Corton is experiencing severe financial dificlies
i casing fing a bankruptcy petition. At this time, it has the fol™*e
© Notes payable anny
‘ots pple amountingtoP92,000 is secured by Furniture estimated
© Silke £02.00 which s 2/3 ofits recorded amount. ae
500 loans payable, P68,750 d chinery wi
ome oe 750 is secured by a ma
SEIPRE smmount of P96,000 expected to make proceeds equal to 70% ofits
© Equipment with carry
slr of igs 59 7 Aout of PGI 250 has an estimated realia®
ther unrecorded lia
pantie rated lites are accrued intereston notes, P3875, 2
Cash availaie phar ie payable, P14,500; and trustee's fee, 10,62
Total assets tag tedaton amounts to P14 875.
Brot to liquidation’ co, Presented in the Statement of Fi
Seed) mounting to pet 000,000 including prepaid expenses ig
500 and P27,500, respectively which D*
aed eeaizable Ale, Remaining CORPORATE UDUDATON 261
ated realizable values were mentioned age tet than thy
fatimnate” ecorded amount med above has a renienene, whone
of th alizable vale
om ‘of Shal
foun abi or ldnvion sme geen he Sa
nation prior amounts to P475,095, Stee Of Financial
po’
what are the amount of net free assets?
Re 199,575 ©. Pl80,650
902,850 4. P226,450
vg 2, what i te e9timated PAYMEDE tthe parti
Rea 69,087 ©. PB IE ued eeitor?
4. P68,730
& 968,120
sem 13-The following data were ascertained forte month of See
rrblem ent of alization andliiation of Bren Cry. ant wed
te Se pe PB,000. Asset reali dang the onthe FRO.
for Ocorded assets duringthe month were P25,000. Assets not solo colle
Unsorted gust were P380,000 Lables assunedwere 2800) ates
attheend fed at the end of August were PaSD000. Lables paid we
10 de spplementary charges were 86,350 and supplementary cei woe
268,800, SePMpelance at the beginning of the month was P1000.
eq, 1: What is the gain or loss on the statement of realization and liquidation?
a. 75,650 &. P19,650
b._ P(75,650) 4. P{19,650)
Req. 2: What is the estate equity at the end of September?
a. P(35,150) . P{60,150)
b. P116,150 . P20,850
Problem 12: The following data were ascertained for the month ‘of November in
the Statement of realisation and liquidation of Leaving Cor Bata cathe
end of October was (P18,500). Liabilities not paid at the end of Ocaber wor
P310,000. Liabilities assumed were 15,800. Assets sold and collected ee
"month were P23S,000. Increase in assets were P3600. ASS615 10" poop,
December were P13,500. Liabilities to be paid oy Decemiegp respect
Supplementary credite and charges were P100,800 and
fate equity at the end of the month was (P12S50-
bet?
Req. t: What be realizedatthe beginningot Nw
oon is the amountof assets tobe eae
308,100 <4. P289,500
Reg, 2 ; ne month af Novembe?
‘ tat is the beginning cash balance 2000
P8500 P1350
“3 __"~—~—~—
ERPORATE Uy
n forinsol %
‘poration teda petition forinsolvency. On Maroy Se
enemas a gn. Te Sane oa
re entty is 9 7
following informatio Estimat uw
Book V: ed
sen a os
Receivables 2,400,000, 20,0)
Building ‘800,000 2,800,099,
land 1y20along
Libis ty 560,000
Unsecured with prot Sebio00
by land) +600,
Notes ay ll 1,200,000
serge pmeble (secured by building) 200.000
Unsecured without pledged assets
eq: Whats the total recovery of partially secured lisbilities?
P1,600,000
& Frame a pis7ase3
eq? Wat annunt wil be paid to bonds payable?
a n1.2m00 #2, 400,000
B00 4. P1,600,000
Problem 14: The bankruptcy trustee for insolvent company sold assets havings
‘camping amount of P25,000 for P18,500 cash. The journal entry to record the
sale is:
a Cash 18,500
ass on realization of assets 6,500
Assets 25,000
b. Cash 18,500
Estate administrative expense 6,500
Assets 25,000
© Cash
Estimated deficiency eeooe
Assets 6.500 ooo
4 cash :
Estate Equi 18,500
‘asels 6,500
25,000
Problem 18: sp , a
5: MP Comp, hi tne
Ae nocaims oricns ges PrePared a statement of affairs. Assets WP cat
“expected to produce P280,000, which must
a
a
ee clams ofall asses ttaingrao an SPURTE LUDATEN 263
unseeerutstanding
spells fing fees for MP Corp, 6,000,
J poco ded n0%ef0F P4000, on which Paap
+ A” fac Company:
APE SPPI2.000 secured by P6600 secret
A noeple held by XYZ cs, estimated tobe 60%
G00 note, on which P120 of interest has accrue, he
ook value of P4,000 and a matiot ware ot ao Be Peery
20 is lege
‘The following are some of
of interes
eresthas accrued, held
‘alle
PO
wath
i nee payment of principal and interest
guard income taxes of P14,000
jount of estimated
at is the amount Payment to partially secured ereitor?
ween ©. Pada) cured reitos
& pri.160 4. P9,960
proviem 16: 1yak Corp. insolvent and has the folowing infomation
[iiimated gains on Fealization of asses oT
Ee timated losses on realization of assets Heed
Additional Assets Somano
‘hdditional Liabilities eae
Ordinary share 5,000,000,
Deficit
What is the estimated percentage payment to be recovered by shareholders?
a. PO.43 ©. PO.70
b. POST 4. P0.30
Problem 17: In a statement of affairs, assets pledged for patally secured
creditors are!
Included with assets pledged to fully secured creditors
Offset against partially secured liabilities
Included with free-assets
Disregarded
of the fllowieg
Problem 18: In accounting for corporate liquidation, which oft
Statements is incorrect?
& Rully secured creditors no longer shi
Payment of unsecured liabilities without pri
Assets used as security for partially secure
Secured debts and can no longer be used 16 POY
Unsecured credits with priority such as liabii°™
to government can always be fully recovered
corporate liquidation.
are n the tnning fe ane ae
or es are offset he
ane aS
verona
teeta eer Jom of the Hinbilities to partially secured cag
é
pte
cof the entity under corporate
The free asset Haida
oe Hon wan,
gistnbuted £0
without priority
se gr wth and thot
Cece cet nem retes 3 an ah
Hecarsrecta atest Poet apes"
2 Sirdar areca mess oe Ah
ert tame of af the em al HO he ang
: ay Net realizable value
+ nan tr evs un Toneesuan Hasan fn he tate
sar, CO asec ess tok val of ibis
© Pethaned realizable walue of assets lest ‘book value of liabilities
sec estat lee cotimated realizable value of asets
& Bek mi eur of asets Jess the amount assigned to sean
eaten
prottem 22: The statement ofaflairs shows a dividend of 120%, The divided
means that
means OO creditors will receive an amount in excess of the book yalue of her
aims.
b. Sharchoiders may expect some retums on their investments,
b Sha na wil woeive an amount in excess of the book value
their daims|
4 Anenor was made in the preparation of the statement of affairs.
Problem 23: Assets in the statement of affairs are classified as follows, except
& Free Assets
b. Curent Assets
Assets pledged to partially secured creditors
4. fascts pledged tol ected editors
Pm 4, ir needy aac wn ciate
Pa pearl tog sealer barmtee of liabilities:
b. Unsecures ee . Pully Secured liabilities
nsec th yi 1 Uneeoaned thot panty
Problem 25: Total esi 7
tstimated resizable value of assets leas tOtll Wyss?
liabilities with print
iorities and the estimate. ‘of assets PIM
fully and partially secured liabilities ie earcaizable value of 88:
tem 26 |
po I partially
| nseesired with and
yeied. partially secured, cingecured og Zliaabtie
bansecured liabilities monty “a
probtem 27 hie mtial 260% prepared by he muater mutate
cash
affairs
{realization and liquidation
prontem 29: Which ofthe following statements ocr wir warn
79: va the statement of realization and Iiquidaton?
lueented in the credit side [ts measured at mee
Mee total non-cash assets 4. None of vbr chovees
proviem 30: Ifthe total debits is greater than the total cret:n he stent
of realization, it means:
a Thee is net gain 5 ¢ There
8. There is net loss chews’
Frotiem 91: The estimated defcieney a0
2. Dedueting the total free assets to the
* poity ;
& Seducing the total net free assets tote
ssthout prionty. .
Deducting the total net free assets tothe ©
oeority
4 Deducting the total estimated:
‘alu of Habiities.
“© fully recover their claims from &
Cusecured ereditors with
Vnsecured ereditors without pion SORPORATE Uta ry ;
85
its shall be settled frst
ene following by the co
oft flier of a snd corporations PM
winding uP ehfpe common stocHholders oF the gy
Pe Soheg
erportioN ge share for the preferred stockholders of the
Liquidation value Pe =
yeti ne stocks for the redeemable preferred sto
Redemption value of the oe
fie dissolved corporat
44. Claims ofthe exeditors of the dissolved corporation
sementofafairs, the expeted recovery percenta
oe eal ee is calculated as: ‘ee fora
= unsecured oi unsecured liabilities without priorities
ed by use lablities plus Habllitice with pio
ity a unsecured liabilities other than unscom
Problem:
compa’
net fee assets divi
Bet fre assets divide’
O Tonal free assets divi
liabilities
4 MUMS gets ded by unsecured Liabilities plus abilities with poy
reklom 8: ich of te folowing would appear on statement of ealizn
Triguation?
and gid rue of sets pledged to partially secured creditors,
f BiStea seiens to unsecured creditors
Retfeutzate value of assets tobe realized
Cash relied of assets sold
Problem 36: Which of the following statements is /are correct?
‘Staenert 1: The accrued interest on notes or bonds payable is classified st
‘unsecured liability with priority
Statement 2: Accounts payable is always classified as unsecured liability witht
Priority in the statement of affairs
a Lonly
¢ Both statements are comect
b Monly Both statement
4. Both statements are incorrect
= ua
STRAIGHT PROBLEMS RATE UIOATIN 267
statement of Affairs
ap which is undergoing liquidation,
Cs of December 31, 2025: a
Le
em
has the fatto
ing conden
Lada
dotn anfag uiee
: Liabilities and Shan 0 walt
asse! 1,584,000 Salaries payate Nt Baty qeoderill-2
Cosh secenable 4606000 Aecuntepe SEO
wo ‘24.000 Bande pense