Question

26: Answer the following questions regarding Bankruptcy

A)Lapin Corp. owned the following assets when it came out of a Chapter 11 bankruptcy:

Inventory	$	220,000	$	175,000
Land		95,000		170,000
Buildings		250,000		400,000
Equipment		420,000		310,000

Lapin Corp. had a fresh start reorganization value of $1,200,000. What amount of goodwill should have been recognized in recording the reorganization?
A) 70,000
B) 145,000
C) 20,000
D) 215,000
E) 90,000

B) Land with a net realizable value of $150,000 is used as collateral against an $85,000 notes payable. In which section of a Statement of Financial Affairs would the land appear?

A)Pledged assets with partially secured creditors.
B)Liabilities with priority.
C)Free assets.
D)Unsecured creditors.
E)Pledged assets with fully secured creditors.

C) Alpha Corp., about to be liquidated, has the following amounts for its assets and liabilities:

		Book Value		Net Realizable Value
Current assets	$	225,000	$	180,000
Land		80,000		100,000
Building		560,000		450,000
Equipment		250,000		120,000
Accounts payable		200,000
Income taxes payable		80,000
Mortgage payable		600,000
Note payable		75,000

The mortgage is secured by the land and building, and the note payable is secured by the equipment. Alpha expects that the expenses of administering the liquidation will total $45,000.
How much should Alpha expect to pay on the accounts payable?

A)200,000
B)100,000
C)145,000
D)80,000
E)95,000

Answer 1

C)D)80000

A)B) 145000

Inventory = $175000

Land = $170000

Buildings = $400000

Equipment = $310000

Total = $1055000

Goodwill = $1200000 - $1055000 = $145000

B)E) pledged assets with fully secured creditors