Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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Textbook Question
Chapter 13, Problem 40P
Kansas City Corporation holds three assets when it comes out of Chapter 11 bankruptcy:
| Book Value | Fair Value | |
| Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | $ 86,000 | $ 50,000 |
| Land and buildings . . . . . . . . . . . . . . . . . . . . . | 250,000 | 400,000 |
| Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 123,000 | 110,000 |
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 accounting is appropriate, how will this company’s assets be reported?
- c. If a
Goodwill account is recognized in a reorganization, where should it be reported? What happens to this balance?
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Kansas City Corporation holds three assets when it comes out of Chapter 11 bankruptcy:
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250000
400000
Equipment
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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 accounting is appropriate, how will this company’s assets be reported?c. If a Goodwill account is recognized in a reorganization, where should it be reported? What happens to this balance?
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Chapter 13 Solutions
Advanced Accounting
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