A company preparing for a Chapter 7 liquidation has listed the following liabilities:Note payable A of $110,000 secured by land having a book value of $60,000 and a fair value of $80,000Note payable B of $140,000 secured by a building having a $70,000 book value and a $50,000 fair value.Note payable C of $70,000, unsecured.Administrative expenses payable of $30,000.Accounts payable of $130,000.Income taxes payable of $40,000.The company also has these other assets:Cash of $16,800.Inventory of $120,000 but with a net realizable value of $70,000.Equipment of $110,000 but with a net realizable value of $60,000Based on this information, how much will each of the company's liabilities be paid at liquidation?Payment on note payable APayment on note payable BPayment on note payable CPayment on administrative expensesPayment on accounts payablePayment on income taxes payableAmount$ 89,154$ 77,463$ 21,360$ 9,154$ 39,669 x$ 40,000

Step 1: Calculation of Free assets after payment of liabilities with priority.Free assets…

Answered: A company preparing for a Chapter 7…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Which of the following best describes the IRC $ 165 reportable loss transaction thresholds applicable to corporations? a. Single year loss of $50,000. b. Single year loss of $2 million and a cumulative loss of $4 million. c. Single year loss of $4 million and a cumulative loss of $20 million. d. Single year loss of $10 million and a glimmulative loss of $20 million.
Assume that Timberline Corporation has 2022 taxable income of $246,000 for purposes of computing the §179 expense. It acquired the following assets in 2022: (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.) Asset Purchase Date Basis Furniture (7-year) December 1 $ 432,000 Computer equipment (5-year) February 28 96,000 Copier (5-year) July 15 36,000 Machinery (7-year) May 22 486,000 Total $ 1,050,000 What would Timberline's maximum depreciation deduction be for 2022 assuming no bonus depreciation?
Chaz Corporation has taxable income in 2021 of $312,000 for purposes of computing the §179 expense and acquired the following assets during the year: Asset Placed in Service Basis Office furniture September 12 $ 780,000 Computer equipment February 10 930,000 Delivery truck August 21 68,000 Qualified improvement property September 30 1,500,000 Total $ 3,278,000 What is the maximum total depreciation deduction that Chaz may deduct in 2021?
Rivendell Corporation uses the accrual method of accounting and has the following assets as of the end of 2020. Rivendell converted to an S corporation on January 1, 2021. (Leave no answer blank. Enter zero if applicable.)Asset Adjusted Basis FMVCash $ 40,000 $ 40,000Accounts receivable 30,000 30,000Inventory 130,000 60,000Land 100,000 125,000Totals $ 300,000 $ 255,000 b. Assuming the land was valued at $200,000, what would be Rivendell’s net unrealized gain at the time it converted to an S corporation? c. Assuming the land was valued at $125,000 but that the inventory was valued at $85,000, what would be Rivendell’s net unrealized gain at the time it converted to an S corporation?
Subject: accounting
4. On November 1, 2021, Agar-Agar Corporation had a division that met the criteria for discontinuance of a business component. For the period January 1 through November 1, 2021, the component had a revenue of P1,000,000 and expenses of P1,200,000. The assets of the component were sold on November 2, 2021 at a loss of P100,000. The income from continuing operations of Agar-Agar for 2021 was P5,000,000. The income tax rate is 25%. What amount should be reported as net income for 2021?
ABC Company acquires its only building on January 1, Year 1, at a cost of $4,000,000. The building has a 20-year life, zero residual value, and is depreciated on a straight-line basis. The company adopts the revaluation model in accounting for buildings. On December 31, Year 2, the fair value of the building is $3,780,000. The company eliminates accumulated depreciation against the building account at the time of revaluation. The company's accounting policy is to reverse a portion of the revaluation surplus account related to increased depreciation expense. On January 2, Year 4, the company sells the building for $3,500,000. Required: 1-Determine the amounts to be reflected in the balance sheet related to this building for Years 1-4 in the following table. (Use parentheses to indicate credit amounts.) Accumulated Date January 1, Year 1 Cost Carrying Amount Revaluation Surplus depreciation 4,000,000 4,000,000 December 31, Year 1 December 31, Year 2 December 31, Year 2 Balance December…
An assert was purchased on 1st July 2017 for a cash price of MYR 205,000. It is a policy of the business to depreciate its asset using the reducing balance method at the rate of 15% per annum on a yearly basis. Calculate the asset’s net book value on 31st December 2019, assuming that the business closes its account on that date. Select one: a. MYR 174,250 b. MYR 125,895.63 c. MYR 137,004.06 d. MYR 125,960.50
A company which prepares financial statements to 31 December classifies a non-current asset as held for sale on 1 SEPTEMBER 20X2. The asset's carrying amount at that date is $20,000 and its fair value is $15,600, with estimated costs to sell of $600. The asset is sold in June 20X3 for $16,000(net of costs). Calculate any impairment losses or gains that should be recognised in the company's statement of profit or loss for the year ended 31 December 20X2 if the asset's fair value less costs to sell at 31 December 20X2 is: a)14,000 b)17,000 c)22,000 In each case, also calculate the profit or loss that should be recognised on the disposal of the asset in 20X3 and comment on the results shown.
Chaz Corporation has taxable income in 2021 of $313,600 for purposes of computing the $179 expense and acquired the following assets during the year. Asset Office furniture Computer equipment Delivery truck Qualified improvement property Total Placed in Service September 12 February 10 August 21 September 30 Maximum total depreciation deduction Basis $ 796,000 946,000 84,000 1,515,000 $3,341,000 What is the maximum total depreciation deduction that Chaz may deduct in 2021? (Use MACRS Table 1. Table 2. Table 3, Table 4 and Table 5.) (Round your intermediate calculations and final answer to the nearest whole dollar amount.)
Subject: accounting

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS