Which of the following is not a liability that has priority in a liquidation? a. Administrative expenses incurred during the liquidation. b. Salary payable of $1,250 per person owed to 26 employees. c. Payroll taxes due to the federal government. d. Advertising expense incurred before the company became insolvent but not recorded until after the order of relief.
> What is the difference between an unconditional promise to give and an intention to give?
> A private not-for-profit entity receives numerous pledges of financial support to be conveyed at various times over the next few years. Under what condition should these pledges be recognized as receivables and contributed support? At what amount should
> A private not-for-profit entity sends a direct mail solicitation for monetary donations. Other information is included with the mailing. Under what conditions can the organization report part of the cost of this mailing as a program service cost rather t
> Prairie Corporation is a primary beneficiary for Vintage Company, a variable interest entity. When Prairie obtained financial control over Vintage, any excess fair value over Prairie’s book value was attributed solely to goodwill. Prairie owns 15 percent
> Under what conditions does a not-for-profit entity record donated services?
> What is a debtor in possession? a. The holder of a note receivable issued by an insolvent company prior to the granting of an order for relief. b. A fully secured creditor. c. The ownership of an insolvent company that continues to control the organizati
> Through the payment of $10,468,000 in cash, Drexel Company acquires voting control over Young Company. This price is paid for 60 percent of the subsidiary’s 100,000 outstanding common shares ($40 par value) as well as all 10,000 shares of 8 percent, cumu
> Arcola, Inc., acquires all 40,000 shares of Tuscola Company for $725,000. A year later, when Arcola’s equity adjusted balance in its investment in Tuscola equals $800,000, Tuscola issues an additional 10,000 shares to outside investors for $25 per share.
> A donor gives a gift to a charity that is to be conveyed to a separate beneficiary. What is the method of reporting for each party if the charity receives variance power enabling it to change the identity of the beneficiary?
> A donor gives a gift to a charity that is to be conveyed to a separate beneficiary. What is the method of reporting for each party if the donor retains the right to revoke or redirect use of the gift?
> A donor gives a gift to a charity that must be conveyed to a separate beneficiary. What is the normal method of reporting for each party?
> Why is a statement of functional expenses required of a voluntary health and welfare entity?
> What ratio is frequently used to assess the efficiency of not-for-profit entities?
> In reporting the functional expenses of a not-for-profit entity, what are the two general types of expenses?
> What are permanently restricted net assets?
> Which of the following is not correct with regard to the Public Company Accounting Oversight Board? a. The board can expel a registered auditing firm without SEC approval. b. All registered auditing firms must be inspected at least every three years. c.
> The parent company acquires all of a subsidiary’s common stock but only 70 percent of its preferred shares. This preferred stock pays a 7 percent annual cumulative dividend. No dividends are in arrears at the current time. How is the noncontrolling inter
> What are temporarily restricted net assets?
> What financial statements are required for private not-for-profit colleges and universities?
> Why is it important for U.S. accountants to be familiar with IFRS?
> What information do financial statement users want to know about a not-for-profit entity?
> Bensman Corporation is computing EPS. One of its subsidiaries has stock warrants outstanding. How do these convertible items affect Bensman’s EPS computation? a. No effect is created because the stock warrants were for the subsidiary company’s shares. b.
> Which organization is responsible for issuing reporting standards for private not-for-profit colleges and universities?
> Read several of the following articles as well as any other published pieces that describe the work of the accountant in bankruptcy cases: “Restructuring for a Positive Return,” CMA Management, December 2005/January 2006. “Alternatives to Bankruptcy Liqu
> Go to www.epiqbankruptcysolutions.com or www.kccllc.net and select one of the current active bankruptcy cases. If available, go to an online business publication database such as Factiva or ABI-Inform. Search for articles that discuss the issues and prob
> Go to www.epiqbankruptcysolutions.com or www.kccllc.net and select one of the current active bankruptcy cases. Required Look through all of the information that is available for the case that you selected. Assume that your boss needs information about t
> Go the following story about the bankruptcy filing of the Great Atlantic & Pacific Tea Company (better known as A & P): http://www.usatoday.com/story/money/2015/07/20/p-grocery-chain-filesbankruptcy-again/30404517/ Then go to the Securities and Exchange
> On a statement of financial affairs, how are liabilities classified? a. Current and noncurrent. b. Secured and unsecured. c. Monetary and nonmonetary. d. Historic and futuristic.
> Which of the following is a requirement of the Sarbanes–Oxley Act of 2002? a. Registration of all auditing firms with the Public Company Accounting Oversight Board. b. Annual inspection of all auditing firms registered with the Public Company Accounting
> An investment analyst has been studying the long-term prospects of Six Flags Entertainment Corporation and has asked for assistance. Go to www.sixflags.com and click on “Investors” at the top of the page. Then, click on “Annual Reports” on the left side
> Aberdeen Corporation is considering the possibility of filing a voluntary petition of bankruptcy because of a particularly high level of debt. The company is publicly traded on a national stock exchange and, therefore, company officials are concerned abo
> Holmes Corporation has filed a voluntary petition with the bankruptcy court in hopes of reorganizing. A statement of financial affairs has been prepared for the company showing these debts: Liabilities with priority: Salaries payable . . . . . . . . . .
> How are IFRS currently used in the United States?
> Use the trial balance presented for Lynch, Inc., in problem (51). Assume that the company will be liquidated and the following transactions will occur: ∙ Accounts receivable of $18,000 are collected with remainder written off. â&#
> Lynch, Inc., is a hardware store operating in Boulder, Colorado. Management recently made some poor inventory acquisitions that have loaded the store with unsalable merchandise. Because of the drop in revenues, the company is now insolvent. The entire in
> Net cash flows from financing activities were a. $(25,000) b. $(37,000) c. $(38,000) d. $(42,000) Comparative consolidated balance sheet data for Iverson, Inc., and its 80 percent–owned subsidiary Oakley Co. follow: Additional Inform
> Oregon Corporation has filed a voluntary petition to reorganize under Chapter 11 of the Bankruptcy Reform Act. Its creditors are considering an attempt to force liquidation. The company currently holds cash of $6,000 and accounts receivable of $25,000. I
> Becket Corporation’s accountant has prepared the following balance sheet as of November 10, 2017, the date on which the company is to release a plan for reorganizing operations under Chapter 11 of the Bankruptcy Reform Act: BECKET CORPORATION Balance She
> Which of the following is the minimum limitation necessary for filing an involuntary bankruptcy petition in connection with a company that has 57 unsecured creditors? a. The signature of 12 creditors to whom the debtor owes at least $14,775 in unsecured
> The following balance sheet has been produced for Litz Corporation as of August 8, 2017, the date on which the company is to begin selling assets as part of a corporate liquidation: LITZ CORPORATION Balance Sheet August 8, 2017 Assets Cash . . . . . . .
> The Securities Exchange Act of 1934 a. Regulates the public trading of previously issued securities through brokers and exchanges. b. Prohibits blue sky laws. c. Regulates the initial offering of securities by a company. d. Requires the registration of i
> Anteium Company owes $80,000 on a note payable that is currently due. The note is held by a local bank and is secured by a mortgage lien attached to three acres of land worth $48,000. The land originally cost Anteium $31,000 when acquired several years a
> Creditors of Jones Corporation are considering petitioning the courts to force the company into Chapter 7 bankruptcy. The following information has been determined. Administrative expenses in connection with the liquidation are estimated to be $22,000. I
> The following balance sheet has been prepared by the accountant for Limestone Company as of June 3, 2017, the date on which the company is to file a voluntary petition of bankruptcy: LIMESTONE COMPANY Balance Sheet June 3, 2017 Assets Cash . . . . . . .
> Ambrose Corporation reports the following information: In liquidation, what amount of cash should each class of liabilities expect to collect? Book Value Liquldation Value $220,000 111,000 $245,000 Assets pledged with fully secured creditors Assets
> Has the IASB-FASB convergence process been successful?
> Smith Corporation has gone through bankruptcy and is ready to emerge as a reorganized entity on December 31, 2017. On this date, the company has the following assets (fair value is based on discounting the anticipated future cash flows): The company ha
> Ristoni Company is in the process of emerging from a Chapter 11 bankruptcy. It will apply fresh start accounting as of December 31, 2017. The company currently has 30,000 shares of common stock outstanding with a $240,000 par value. As part of the reorga
> Jaez Corporation is in the process of going through a reorganization. As of December 31, 2017, the company’s accountant has determined the following information although the company is still several months away from emerging from the ba
> Net cash flows from operating activities were a. $12,000 b. $20,000 c. $24,000 d. $25,000 Comparative consolidated balance sheet data for Iverson, Inc., and its 80 percent–owned subsidiary Oakley Co. follow: Additional Information fo
> Kansas City Corporation holds three assets when it comes out of Chapter 11 bankruptcy: The company has a reorganization value of $600,000. a. Describe the rules to determine whether to apply fresh start accounting to Kansas City. b. If fresh start acco
> What is the difference between Regulation S–K and Regulation S–X? a. Regulation S–K establishes reporting requirements for companies in their initial issuance of securities whereas Regulation S–X is directed toward the subsequent issuance of securities.
> Addison Corporation is currently going through a Chapter 11 bankruptcy. The company has the following account balances for the current year. Prepare an income statement for this organization. The effective tax rate is 20 percent (realization of any tax b
> The Larisa Company is exiting bankruptcy reorganization with the following accounts: The company’s assets have a $760,000 reorganization value. As part of the reorganization, the company’s owners transferred 80 perce
> An order for relief creates an automatic stay that a. Prohibits creditors from taking action to collect from an insolvent company without court approval. b. Calls for the immediate distribution of free assets to unsecured creditors. c. Can be entered onl
> An involuntary bankruptcy petition must be filed by a. The insolvent company’s attorney. b. The holders of the insolvent company’s debenture bonds. c. Unsecured creditors with total debts of at least $15,775. d. The company’s management.
> Pumpkin Company is going through bankruptcy reorganization. It has a $200,000 note payable incurred prior to the order for relief. The company believes that the note will be settled for $60,000 in cash. It is also possible that the creditor will instead
> The Jackston Company is to be liquidated as a result of bankruptcy. Until the liquidation occurs, on what basis are its assets reported? a. Present value calculated using an appropriate effective rate. b. Net realizable value. c. Historical cost. d. Book
> In a bankruptcy, which of the following statements is true? a. An order for relief results only from a voluntary petition. b. Creditors entering an involuntary petition must have debts totaling at least $21,625. c. Secured notes payable are considered li
> A company’s management has uncovered events that indicate that substantial doubt exists that the company can pay its debts as they come due over the following year. Management studies the plans created to address this risk. How can the company avoid disc
> A company’s management has uncovered events that indicate that substantial doubt exists that the company can pay its debts as they come due over the following year. What should management do next? a. Management should disclose that substantial doubt exis
> What are the objectives of the bankruptcy laws in the United States? a. Provide relief for the court system and ensure that all debtors are treated the same. b. Distribute assets fairly and discharge honest debtors from their obligations. c. Protect the
> A subsidiary has a debt outstanding that was originally issued at a discount. At the beginning of the current year, the parent company acquired the debt at a slight premium from outside parties. Which of the following statements is true? a. Whether the b
> How do noncontrolling interest balances affect the consolidated statement of cash flows?
> How is goodwill computed if fresh start accounting is applied to a reorganized company?
> What is the difference between a Form 10–K and a Form 10–Q?
> What are the steps that a company must follow in preparing its initial set of IFRS financial statements upon the company’s first-time adoption of IFRS?
> A company going through a Chapter 7 bankruptcy has the following account balances: Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 30,000 Receivables (30% collectible) .
> When fresh start accounting is utilized, how are a company’s assets and its liabilities reported?
> Under what conditions does a company that is emerging from a bankruptcy reorganization use fresh start accounting?
> What is meant by the term fresh start accounting?
> What accounting is made of the professional fees incurred during a reorganization?
> During reorganization, how should a company’s income statement be structured?
> While a company goes through reorganization, how should its assets and liabilities be reported?
> In a bankruptcy proceeding, what is a cram down?
> Under normal conditions, how does a reorganization plan become effective?
> What types of proposals might a reorganization plan include?
> What is the purpose of the Management’s Discussion and Analysis
> Olds Company declares Chapter 7 bankruptcy. The following are the asset and liability book values at that time. Administrative expenses are estimated to be $20,000: The holders of note payable B want to collect at least $129,000. To achieve this goal,
> Bolero Company holds 80 percent of the common stock of Rivera, Inc., and 40 percent of this subsidiary’s convertible bonds. The following consolidated financial statements are for 2017 and 2018: Additional Information for 2018 â
> What are three countries that do not allow domestic publicly traded companies to use IFRS to prepare consolidated financial statements?
> Who can develop reorganization plans in a Chapter 11 bankruptcy?
> What does the term debtor in possession mean?
> How does a company report its assets when the liquidation basis of accounting is applied? How does a company report its liabilities when the liquidation basis of accounting is applied?
> In following the liquidation basis of accounting, what financial statements must be presented?
> In determining whether a company needs to use the liquidation basis of accounting, how does the accountant determine that liquidation is imminent?
> When is a company required to use the liquidation basis of accounting to be in conformity with U.S. GAAP?
> If a company is not required to follow U.S. GAAP, a statement of realization and liquidation can be prepared during liquidation. What information can be gained from this statement?
> A trustee for a company that is being liquidated voids a preference transfer. What has happened, and why did the trustee take this action?
> What did the FASB and IASB agree to do in the Norwalk Agreement?
> When is a Form 8–K issued by a company? What specific information does a Form 8–K convey?
> In a bankruptcy liquidation, what actions does the trustee perform?
> What is the purpose of a statement of financial affairs? Why might this statement be prepared before a bankruptcy petition is filed?
> Some say that IFRS are now GAAP in the European Union. How is this statement true, and how is it false?
> On January 1, 2017, Mona, Inc., acquired 80 percent of Lisa Company’s common stock as well as 60 percent of its preferred shares. Mona paid $65,000 in cash for the preferred stock, with a call value of 110 percent of the $50 per share p
> What is the difference between a Chapter 7 bankruptcy and a Chapter 11 bankruptcy?
> Why are administrative expenses that are incurred during a liquidation classified as liabilities having priority?
> In a bankruptcy proceeding, what is the significance of a liability with priority? What are the general categories of liabilities that have priority in a liquidation?
> What is the difference between fully secured liabilities, partially secured liabilities, and unsecured liabilities?
> A bankruptcy court enters an order for relief. How does this action affect an insolvent company and its creditors?
