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Distressed Corporation is undergoing liquidation. Relevant information as of January 1, 20x1 is shown below: ASSETS Carrying Amount Net Realizable Value Cash P250,000 150,000 600,000 1,700,000 P300,000 355,649 200,000 1,500,000 P2,355,649 Accounts Receivable Equipment-net Land TOTAL ASSETS P2,700,000 LIABILITIES Carrying Settlement Amount Amount Accounts Payable Salaries Payable Notes Payable Loan Payable TOTAL LIABILITIES P1,000,000 500,000 800,000 800,000 P1,000,000 500,000 805,234 800,000 P3,100,000 P3,105,234 EQUITY Share Capital Retained Earnings Capital Deficiency P1,600,000 (2,000,000) (400,000) TOTAL LIABILITIES & EQUITY P2,700,000 Additional Information: Administrative expenses amounting to P180,744 are expected to be incurred during the liquidation process. The equipment is pledged to the loan payable. The land is pledged to the notes payable. QUESTIONS: 1. How much are the total free assets? 2. How much are the unsecured liabilities with priority? 3. How much are the total unsecured liabilities without priority? 4. How much are the net free assets? 5. What is the estimated deficiency? 6. What is the estimated recovery percentage? 7. What is the amount paid to unsecured creditors without priority? 8. What is the amount paid to partially secured creditors?

Distressed Corporation is undergoing liquidation. Relevant information as of January 1, 20x1 is shown below: ASSETS Carrying Amount Net Realizable Value Cash P250,000 150,000 600,000 1,700,000 P300,000 355,649 200,000 1,500,000 P2,355,649 Accounts Receivable Equipment-net Land TOTAL ASSETS P2,700,000 LIABILITIES Carrying Settlement Amount Amount Accounts Payable Salaries Payable Notes Payable Loan Payable TOTAL LIABILITIES P1,000,000 500,000 800,000 800,000 P1,000,000 500,000 805,234 800,000 P3,100,000 P3,105,234 EQUITY Share Capital Retained Earnings Capital Deficiency P1,600,000 (2,000,000) (400,000) TOTAL LIABILITIES & EQUITY P2,700,000 Additional Information: Administrative expenses amounting to P180,744 are expected to be incurred during the liquidation process. The equipment is pledged to the loan payable. The land is pledged to the notes payable. QUESTIONS: 1. How much are the total free assets? 2. How much are the unsecured liabilities with priority? 3. How much are the total unsecured liabilities without priority? 4. How much are the net free assets? 5. What is the estimated deficiency? 6. What is the estimated recovery percentage? 7. What is the amount paid to unsecured creditors without priority? 8. What is the amount paid to partially secured creditors?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter23: Corporate Restructuring
Section: Chapter Questions
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Distressed Corporation is undergoing liquidation. Relevant information as of January 1, 20x1 is shown below: ASSETS Carrying Amount Net Realizable Value P300,000 355,649 200,000 1,500,000 Cash Accounts Receivable P250,000 150,000 600,000 1,700,000 P2,700,000 Equipment-net Land TOTAL ASSETS P2,355,649 LIABILITIES Carrying Amount Settlement Amount Accounts Payable Salaries Payable Notes Payable Loan Payable P1,000,000 500,000 800,000 800,000 P3,100,000 P1,000,000 500,000 805,234 800,000 P3,105,234 TOTAL LIABILITIES EQUITY Share Capital Retained Earnings Capital Deficiency P1,600,000 (2,000,000) (400,000) TOTAL LIABILITIES & EQUITY P2,700,000 Additional Information: Administrative expenses amounting to P180,744 are expected to be incurred during the liquidation process. The equipment is pledged to the loan payable. The land is pledged to the notes payable. QUESTIONS: 1. How much are the total free assets? 2. How much are the unsecured liabilities with priority? 3. How much are the total unsecured liabilities without priority? 4. How much are the net free assets? 5. What is the estimated deficiency? 6. What is the estimated recovery percentage? 7. What is the amount paid to unsecured creditors without priority? 8. What is the amount paid to partially secured creditors?
Transcribed Image Text:Distressed Corporation is undergoing liquidation. Relevant information as of January 1, 20x1 is shown below: ASSETS Carrying Amount Net Realizable Value P300,000 355,649 200,000 1,500,000 Cash Accounts Receivable P250,000 150,000 600,000 1,700,000 P2,700,000 Equipment-net Land TOTAL ASSETS P2,355,649 LIABILITIES Carrying Amount Settlement Amount Accounts Payable Salaries Payable Notes Payable Loan Payable P1,000,000 500,000 800,000 800,000 P3,100,000 P1,000,000 500,000 805,234 800,000 P3,105,234 TOTAL LIABILITIES EQUITY Share Capital Retained Earnings Capital Deficiency P1,600,000 (2,000,000) (400,000) TOTAL LIABILITIES & EQUITY P2,700,000 Additional Information: Administrative expenses amounting to P180,744 are expected to be incurred during the liquidation process. The equipment is pledged to the loan payable. The land is pledged to the notes payable. QUESTIONS: 1. How much are the total free assets? 2. How much are the unsecured liabilities with priority? 3. How much are the total unsecured liabilities without priority? 4. How much are the net free assets? 5. What is the estimated deficiency? 6. What is the estimated recovery percentage? 7. What is the amount paid to unsecured creditors without priority? 8. What is the amount paid to partially secured creditors?
Below is the statement of realization and liquidation of Alex Corporation, which is under receivership for the month ended July 31, 20x5: Assets Assets acquired: Accounts receivable Assets realized: P20,000 Investment at fair value P24,000 Assets to be realized: Assets not realized: 32,000 Accounts receivable 76,000 40,000 Liabilities Investment at fair value Accounts receivable 10,000 30,000 Merchandise inventory Merchandise inventory Liabilities to be liquidated: Liabilities liquidated: Accounts payable P56,000 Accounts payable P90,000 Liabilities not liquidated: Accounts payable Accrued expenses Liabilities assumed: 20,000 Accounts payable 4,000 16,000 Supplementary Items Supplementary Income P3,000 Sales on account 15,000 Cash sales Interest income Supplementary Expenses Purchases P12,000 40,000 4,000 Expenses QUESTIONS: 9. What is the net income or loss for the period?
Transcribed Image Text:Below is the statement of realization and liquidation of Alex Corporation, which is under receivership for the month ended July 31, 20x5: Assets Assets acquired: Accounts receivable Assets realized: P20,000 Investment at fair value P24,000 Assets to be realized: Assets not realized: 32,000 Accounts receivable 76,000 40,000 Liabilities Investment at fair value Accounts receivable 10,000 30,000 Merchandise inventory Merchandise inventory Liabilities to be liquidated: Liabilities liquidated: Accounts payable P56,000 Accounts payable P90,000 Liabilities not liquidated: Accounts payable Accrued expenses Liabilities assumed: 20,000 Accounts payable 4,000 16,000 Supplementary Items Supplementary Income P3,000 Sales on account 15,000 Cash sales Interest income Supplementary Expenses Purchases P12,000 40,000 4,000 Expenses QUESTIONS: 9. What is the net income or loss for the period?
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