Statement I: In cases wherein the net free assets are greater than the unsecured claims, the difference is called estimated deficiency to unsecured claims. Statement II: Fully secured creditors are holding a claim that is higher than the estimated realizable value of the assets pledged. O Only Statement II is correct O Both statements are correct O Both statements are incorrect O Only Statement I is correct Statement I: All the free assets (including free asset portion from an asset pledged to fully secured creditors) will be used to pay all the unsecured claims. Statement II: Whenever there is estimated deficiency to unsecured claims, stockholders will receive nothing. O Both statements are correct O Only Statement II is correct O Both statements are incorrect O Only Statement I is correct

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Statement I: In cases wherein the net free
assets are greater than the unsecured claims,
the difference is called estimated deficiency
to unsecured claims.
Statement II: Fully secured creditors are
holding a claim that is higher than the
estimated realizable value of the assets
pledged.
O Only Statement II is correct
O Both statements are correct
O Both statements are incorrect
O Only Statement I is correct
Transcribed Image Text:Statement I: In cases wherein the net free assets are greater than the unsecured claims, the difference is called estimated deficiency to unsecured claims. Statement II: Fully secured creditors are holding a claim that is higher than the estimated realizable value of the assets pledged. O Only Statement II is correct O Both statements are correct O Both statements are incorrect O Only Statement I is correct
Statement I: All the free assets (including free
asset portion from an asset pledged to fully
secured creditors) will be used to pay all the
unsecured claims.
Statement II: Whenever there is estimated
deficiency to unsecured claims, stockholders
will receive nothing.
O Both statements are correct
O Only Statement II is correct
O Both statements are incorrect
O Only Statement I is correct
Transcribed Image Text:Statement I: All the free assets (including free asset portion from an asset pledged to fully secured creditors) will be used to pay all the unsecured claims. Statement II: Whenever there is estimated deficiency to unsecured claims, stockholders will receive nothing. O Both statements are correct O Only Statement II is correct O Both statements are incorrect O Only Statement I is correct
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