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Performance Task 1

Gone Corporation is undergoing liquidation and its financial position as of January 1, 20x1 is presented. Total assets are P3 million with net realizable values of P2.4 million. Total liabilities are P3.2 million. Legal and liquidation fees are expected to be P60,000. The machinery and building are pledged as collateral for loans. Creditors will likely receive partial payment and shareholders will receive no payment due to the capital deficiency.

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176 views1 page

Performance Task 1

Gone Corporation is undergoing liquidation and its financial position as of January 1, 20x1 is presented. Total assets are P3 million with net realizable values of P2.4 million. Total liabilities are P3.2 million. Legal and liquidation fees are expected to be P60,000. The machinery and building are pledged as collateral for loans. Creditors will likely receive partial payment and shareholders will receive no payment due to the capital deficiency.

Uploaded by

wivada
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Gone Corporation is undergoing liquidation.

The financial position as of January 1, 20x1 is shown below:

ASSETS CARRYING NET REALIZABLE


AMOUNT VALUES
Cash 100,000 100,000
Accounts receivable 600,000 500,000
Inventories 900,000 500,000
Machinery – net 600,000 300,000
Building – net 800,000 1,000,000
TOTAL ASSETS

LIABILITIES
Accrued payables 300,000 300,000
Accounts payable 700,000 700,000
Income tax payable 1,000,000 1,000,000
Short-term bank loan 500,000 500,000
Mortgage payable 700,000 700,000
TOTAL LIABILITIES 3,200,000 3,200,000

EQUITY
Share capital 1,200,000
Deficit (1,400,000)
Capital Deficiency (200,000)
TOTAL LIABILITIES AND 3,000,000
EQUITY

Additional Information:

• Legal and other fees expected to be incurred during the liquidation process is P60,000.
• The machinery is pledged as collateral security for the short-term bank loan.
• The building is pledged as collateral security for the mortgage payable

Requirements:
a) Identify the following classifications of the assets:
1. Assets pledged to fully secured creditors
2. Assets pledged to partially secured creditors
3. Free assets and Net free assets

b) Identify the following classifications of the liabilities:


1. Unsecured liabilities with priority
2. Fully secured liabilities
3. Partially secured liabilities
4. Unsecured liabilities without priority

c) Compute for the estimated deficiency


d) Compute for the estimated recovery percentage
e) If you are a creditor of Gone Corporation for P100,000 classified as accrued payables, how much
would you expect to receive from your claim?
f) If you are a stockholder of Gone Corporation holding 1,000 shares with P10 par value, how much
would you expect to receive from you claim?
g) Prepare the statement of affairs

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