ADVANCED ACCT CUSTOM W/CONNECT
14th Edition
ISBN: 9781307697711
Author: Hoyle
Publisher: MCG/CREATE
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Textbook Question
Chapter 13, Problem 36P
A company going through a Chapter 7 bankruptcy has the following account balances:
| Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | $ 30,000 |
| Receivables (30% collectible) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 50,000 |
| Inventory (worth $39,000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 90,000 |
| Land (worth $120,000) (secures note payable) . . . . . . . . . . . . . . . . . . . . . . . . | 100,000 |
| Buildings (worth $180,000) (secures bonds payable) . . . . . . . . . . . . . . . . . . . | 200,000 |
| Salaries payable (Four workers owed equal amounts for last two weeks) . . . | 10,000 |
| Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 90,000 |
| Note payable (secured by land) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 110,000 |
| Bonds payable (secured by building) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 300,000 |
| Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 100,000 |
| (140,000) |
How much will be paid to each of the following?
Salaries payable
Accounts payable
Note payable
Bonds payable
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On May 31, 2026, Oriole Company paid $3,290,000 to acquire all of the common stock of Pharoah Corporation, which became a
division of Oriole. Pharoah reported the following balance sheet at the time of the acquisition:
Current assets
$846,000
Current liabilities
$564,000
Noncurrent assets
2,538,000
Long-term liabilities
470,000
Stockholder's equity
2,350,000
Total assets
$3,384,000
Total liabilities and stockholder's equity
$3,384,000
It was determined at the date of the purchase that the fair value of the identifiable net assets of Pharoah was $2,914,000. At
December 31, 2026, Pharoah reports the following balance sheet information:
Current assets
$752,000
Noncurrent assets (including goodwill recognized in purchase)
2,256,000
Current liabilities
(658,000)
Long-term liabilities
(470,000)
Net assets
$1,880,000
It is determined that the fair value of the Pharoah division is $2,068,000.
On May 31, 2026, Oriole Company paid $3,290,000 to acquire all of the common stock of Pharoah Corporation, which became a
division of Oriole. Pharoah reported the following balance sheet at the time of the acquisition:
Current assets
$846,000
Current liabilities
$564,000
Noncurrent assets
2,538,000
Long-term liabilities
470,000
Stockholder's equity
2,350,000
Total assets
$3,384,000
Total liabilities and stockholder's equity
$3,384,000
It was determined at the date of the purchase that the fair value of the identifiable net assets of Pharoah was $2,914,000. At
December 31, 2026, Pharoah reports the following balance sheet information:
Current assets
$752,000
Noncurrent assets (including goodwill recognized in purchase)
2,256,000
Current liabilities
(658,000)
Long-term liabilities
(470,000)
Net assets
$1,880,000
It is determined that the fair value of the Pharoah division is $2,068,000.
The following transactions involving intangible assets of Oriole Corporation occurred on or near December 31, 2025.
1.) Oriole paid Grand Company $520,000 for the exclusive right to market a particular product, using the Grand name and logo in promotional material. The franchise runs for as long as Oriole is in business.
2.) Oriole spent $654,000 developing a new manufacturing process. It has applied for a patent, and it believes that its application will be successful.
3.) In January 2026, Oriole's application for a patent (#2 above) was granted. Legal and registration costs incurred were $247,800. The patent runs for 20 years. The manufacturing process will be useful to Oriole for 10 years.
4.) Oriole incurred $168,000 in successfully defending one of its patents in an infringement suit. The patent expires during December 2029.
5.) Oriole incurred $446,400 in an unsuccessful patent defense. As a result of the adverse verdict, the patent, with a remaining unamortized cost of…
Chapter 13 Solutions
ADVANCED ACCT CUSTOM W/CONNECT
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