Distressed Corporation is undergoing liquidation. Relevant information as of January 1, 20x1 is shown below: ASSETS Carrying Amount Net Realizable Value Cash P250,000 P300,000 Accounts Receivable 150,000 355,649 Equipment-net 600,000 200
Distressed Corporation is undergoing liquidation. Relevant information as of January 1, 20x1 is shown below:
ASSETS
Carrying
Amount
Net Realizable
Value
Cash P250,000 P300,000
Accounts Receivable 150,000 355,649
Equipment-net 600,000 200,000
Land 1,700,000 1,500,000
TOTAL ASSETS P2,700,000 P2,355,649
LIABILITIES
Carrying
Amount
Settlement
Amount
Accounts Payable P1,000,000 P1,000,000
Salaries Payable 500,000 500,000
Notes Payable 800,000 805,234
Loan Payable 800,000 800,000
TOTAL LIABILITIES P3,100,000 P3,105,234
EQUITY
Share Capital P1,600,000
Retained Earnings (2,000,000)
Capital Deficiency (400,000)
TOTAL LIABILITIES & EQUITY P2,700,000
Additional Information:
• Administrative expenses amounting to P180,744 are expected to be incurred during the liquidation
process.
• The equipment is pledged to the loan payable.
• The land is pledged to the notes payable.
QUESTIONS:
4. How much are the net free assets? _____________
5. What is the estimated deficiency? _____________
6. What is the estimated recovery percentage?
Step by step
Solved in 3 steps with 1 images