ABC Company filed for a voluntary bankruptcy which was granted after having submitted all the required papers and documents. You are provided the following information as of June 30, 2022: Assets Net Book Value Liquidation Value Cash P 4,997 Investments in equity securities 25,000 P40,000 plus uncollected dividends of P5,000 Accounts receivable, net 54,000 P28,000 expected collection Inventory 75,000 P100,000 after further processing of P10,000 Prepaid expense 8,000 P2,000 is refundable Land 140,000 150% of net book value Building, net 200,000 90% of net book value Equipment 80,000 30% of net book value Goodwill 10,000 Liabilities and Equity Carrying Value Other Information Notes payable P120,000 Secured by inventory Trade and other payables 100,000 Loans payable 350,000 Secured by land and building Share capital 300,000 Retained Earnings (Deficit) (273,000) Additional information: ABC Company failed to accrue its interest on the loans payable. Based on the loan agreement, interest of 10% is payable annually every December 31. Trade and other payables included the following: salaries payable, P20,000; taxes payable, P5,000 Administrative costs for liquidation are expected to be P10,000. Use XX.XX% in the estimated recovery percentage. How much is the net free assets? How much is the estimated estate equity (deficit)? How much is the expected payment as settlement of the notes payable? How much is the expected payment as settlement of the loans payable?
ABC Company filed for a voluntary bankruptcy which was granted after having submitted all the required papers and documents. You are provided the following information as of June 30, 2022: Assets Net Book Value Liquidation Value Cash P 4,997 Investments in equity securities 25,000 P40,000 plus uncollected dividends of P5,000 Accounts receivable, net 54,000 P28,000 expected collection Inventory 75,000 P100,000 after further processing of P10,000 Prepaid expense 8,000 P2,000 is refundable Land 140,000 150% of net book value Building, net 200,000 90% of net book value Equipment 80,000 30% of net book value Goodwill 10,000 Liabilities and Equity Carrying Value Other Information Notes payable P120,000 Secured by inventory Trade and other payables 100,000 Loans payable 350,000 Secured by land and building Share capital 300,000 Retained Earnings (Deficit) (273,000) Additional information: ABC Company failed to accrue its interest on the loans payable. Based on the loan agreement, interest of 10% is payable annually every December 31. Trade and other payables included the following: salaries payable, P20,000; taxes payable, P5,000 Administrative costs for liquidation are expected to be P10,000. Use XX.XX% in the estimated recovery percentage. How much is the net free assets? How much is the estimated estate equity (deficit)? How much is the expected payment as settlement of the notes payable? How much is the expected payment as settlement of the loans payable?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
8
ABC Company filed for a voluntary bankruptcy which was granted after having submitted all the required papers and documents. You are provided the following information as of June 30, 2022:
|
Assets |
Net Book Value |
|
Liquidation Value |
|
Cash |
P 4,997 |
|
|
|
Investments in equity securities |
25,000 |
|
P40,000 plus uncollected dividends of P5,000 |
|
Accounts receivable, net |
54,000 |
|
P28,000 expected collection |
|
Inventory |
75,000 |
|
P100,000 after further processing of P10,000 |
|
Prepaid expense |
8,000 |
|
P2,000 is refundable |
|
Land |
140,000 |
|
150% of net book value |
|
Building, net |
200,000 |
|
90% of net book value |
|
Equipment |
80,000 |
|
30% of net book value |
|
|
10,000 |
|
|
|
|
|
|
|
|
Liabilities and Equity |
Carrying Value |
|
Other Information |
|
Notes payable |
P120,000 |
|
Secured by inventory |
|
Trade and other payables |
100,000 |
|
|
|
Loans payable |
350,000 |
|
Secured by land and building |
|
Share capital |
300,000 |
|
|
|
|
(273,000) |
|
|
Additional information:
- ABC Company failed to accrue its interest on the loans payable. Based on the loan agreement, interest of 10% is payable annually every December 31.
- Trade and other payables included the following: salaries payable, P20,000; taxes payable, P5,000
- Administrative costs for liquidation are expected to be P10,000.
Use XX.XX% in the estimated recovery percentage.
- How much is the net free assets?
- How much is the estimated estate equity (deficit)?
- How much is the expected payment as settlement of the notes payable?
- How much is the expected payment as settlement of the loans payable?
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