The Walston Company is to be liquidated and has the following liabilities:$ 11,800128,00089,000Income taxesNotes payable (secured by land)Accounts payableSalaries payable (evenly divided betweentwo employees)Bonds payableAdministrative expenses for liquidation8,00074,00024,000The company has the following assets:ВookFairValueValueCurrent assets$ 84,000104,000104,000$ 39,00094,000123,000LandBuildings and equipnentHow much money will the holders of the notes payable collect following liquidatio

A firm is said to be in liquidation when its assets are sold, it stops doing business, and it is…

Answered: The Walston Company is to be liquidated…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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2
The A&Z Real Estate Co. is to be liquidated. The book value of its assets is $62.0 billion. Bonds with a face value of $39 billion are secured by a mortgage on the company's Toronto and New York buildings. A&Z has subordinated debentures outstanding in the amount of $44.5 billion; shareholders' equity has a book value of $11.5 billion; $12.0 billion is used to cover administrative costs and other claims (including unpaid wages, pension benefits, legal fees, and taxes). The company has a liquidating value of $41 billion. Of this amount, $16.5 billion represents the proceeds from the sale of the Toronto and New York buildings. As the trustee in bankruptcy, you wish to follow the bankruptcy law strictly. What is your proposed distribution? (Enter the answers in billions. Do not round the intermediate calculations. Do not leave any empty spaces; input a O wherever it is required. Round the final answers to 1 decimal place. Omit $ sign in your response.) Admin. Costs & other Mortgage bonds…
PR Company pays $25,000 in cash and issues no-par stock with a fair value of $40,000 to acquire all of SX Corporation's net assets. SX's balance sheet at the date of acquisition is as follows: Current assets Property, plant & equipment, net Identifiable intangible assets Total assets Current liabilities Long-term debt Capital stock Retained earning SX Corporation Book value Fair value $5,000 $8,000 13,000 4,000 $22,000 Accumulated other comprehensive income Treasury stock Total abilities & equity $4,600 14,500 4,000 5.500 (1,000) (R600) $22,000 9,000 13,000 $5,600 13,800 PR's consultants find these items that are not reported on SXS balance sheet
At the beginning of the year 1, Down Under Company raises $60 million of equity and uses the proceeds to buy a fixed asset. Operating profits before depreciation (all received in cash) and dividends for the company are expected to be $40 million in year 1, $50 million in year 2, and $60 million in year 3, ath which point the company terminates. The firms pays no taxes. Assuming stright line depreciation to zero (of 20 million per year) the firm's profits thus equal $20 in year 1, $30 million in year 2 and $40 milion in year 3. If the cost of equity is 6%, the value of the firms equity is: Use the Discounted Dividend Valuation Method
Mainline Produce Corporation acquired all the outstanding common stock of Iceberg Lettuce Corporation for $32,000,000 in cash. The book values and fair values of Iceberg's assets and liabilities were as follows: Book Value Fair Value $ 12,000,000 $ 15,000,000 21,400,000 3,600,000 8,000,000 14,000,000 Current assets Property, plant, and equipment Other assets 27,400,000 4,600,000 8,000,000 13,000,000 Current liabilities Long-term liabilities Required: Calculate the amount paid for goodwill. (Enter your answer in millions (i.e. 5,000,000 should be entered as 5).) Amount paid for goodwill million
A Company that was to be liquidated had the following liabilities: Income Taxes 10,000 Notes Payable secured by land 100,000 Accounts Payable 251,050 Salaries Payable 12,950 Administrative expenses or liquidation 20,000 The Company had the following assets: Book Value Fair Value Current assets 100,000 95,000 Land 50,000 75,000 Building 150,000 200,000 QUESTION: Determine the total net free assets.
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New Harvest Bakery acquired all the outstanding common stock of Red Rock Bakery for $72,800 in cash. The book values and fair values of Red Rock's assets and liabilities were as follows: Book Value Fair Value Current assets Property, plant, and equipment Other assets Current liabilities Long-term liabilities $25,100 43,900 4,900 18,000 25,600 $23,900 50,400 5,700 14,600 20,500 Calculate the amount paid for goodwill. Goodwill
Northern Equipment Corporation purchased all the outstanding common stock of Pioneer Equipment Rental tor $5,550,000 in cash. The book values and fair values of Pioneer's assets and liabilities were: Fair Value 600,000 4,750,000 210,000 (800,000) $ 4,760,000 Book Value $ 700,000 4,050,000 Accounts Receivable Buildings Equipment Accounts Payable 120,000 (800,000) $ 4,070,000 Net assets Required: 1. Calculate the amount Northern Equipment should report for goodwill. Goodwill 2. Record Northern Equipment's acquisition of Pioneer Equipment Rental. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 1 > Record the acquisition of Pioneer Equipment Rental. Note: Enter debits before credits. Transaction General Journal Debit Credit 1
Northern purchased the entire business of Southern including all its assets and liabilities for $658,000. Below is information related to the two companies: Northern Southern Fair value of assets $1,044,000 $798,000 Fair value of liabilities 585,000 315,000 Reported assets 813,000 634,000 Reported liabilities 483,000 258,000 Net Income for the year 59,000 58,000 How much goodwill did Northern pay for acquiring Southern?
SFFN Corp. purchased the entire business of AZC, Inc. including all its assets and liabilities for $1,800,000. Below is information related to the two companies: SFFN AZC Fair value of assets $ 3,050,000 $ 1,600,000 Fair value of liabilities 2,575,000 800,000 Reported assets 2,800,000 1,400,000 Reported liabilities 2,500,000 750,000 Net Income for the year 460,000 250,000 How much goodwill will SFFN recognize as a result of its acquisition of AZC? Select one: a. $-0- b. $1,225,000 c. $1,150,000 d. $200,000 e. $1,000,000
The Walston Company is to be liquidated. It has the following liabilities: Income taxes Notes payable (secured by land) Accounts payable Salaries payable (evenly divided between two employees) Bonds payable Administrative expenses for liquidation The company has the following assets: $ 7,600 136,000 93,000 14,000 78,000 28,000 Book Value Fair Value Current assets $ 88,000 Land 108,000 Buildings and equipment 108,000 $ 43,000 98,000 132,000 Required: How much money will the holders of the notes payable collect following liquidation? Total amount collected

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