Question 1

Chapter 11 of the Bankruptcy Code provides for:
I.Reorganization.
II.Liquidation.

Accepted Answer

A)  I only 
B)  II only 
C)  Both I and II 
D)  Neither I nor II 
A)  I only 
B)  II only 
C)  Both I and II 
D)  Neither I nor II A

Question 2

A "debtor-in-possession" balance sheet is prepared for a company which:

Accepted Answer

A)  is having its debts restructured. 
B)  is undergoing a liquidation under Chapter 7. 
C)  is undergoing a reorganization under Chapter 11. 
D)  is in bankruptcy reorganization but management still controls the company. 
A)  is having its debts restructured. 
B)  is undergoing a liquidation under Chapter 7. 
C)  is undergoing a reorganization under Chapter 11. 
D)  is in bankruptcy reorganization but management still controls the company. D

Question 3

The Bankruptcy Reform Act contains chapters which deal with:
I.Individuals.
II.Corporations.
III.Municipal governments.

Accepted Answer

A)  Only I and II 
B)  Only II and III 
C)  Only I and III 
D)  I, II, and III 
A)  Only I and II 
B)  Only II and III 
C)  Only I and III 
D)  I, II, and III D

Question 4

"Preference payments" made by the debtor to one creditor to the detriment of all other creditors within 90 days before the bankruptcy petition was filed:

Accepted Answer

A)  is reduced from the monies available to the general unsecured creditors. 
B)  is usually written off. 
C)  may be recovered and returned to the cash available for all creditors. 
D)  are not recovered, as management assurances are binding. 
A)  is reduced from the monies available to the general unsecured creditors. 
B)  is usually written off. 
C)  may be recovered and returned to the cash available for all creditors. 
D)  are not recovered, as management assurances are binding.

Question 5

Wilbur Corporation is to be liquidated under Chapter 7 of the Bankruptcy Code.The balance sheet on December 31,20X8,is as follows:
The following additional information is available:
1.Marketable securities consist of 2,000 shares of Bristol Inc.common stock.The market value per share of the stock is $8.The stock was pledged against a $20,000,8 percent note payable that has accrued interest of $800.
2.Accounts receivable of $40,000 are collateral for a $35,000,10 percent note payable that has accrued interest of $3,500.
3.Inventory with a book value of $35,000 and a current value of $32,000 is pledged against accounts payable of $60,000.The appraised value of the remainder of the inventory is $50,000.
4.Only $1,000 will be recovered from prepaid insurance.
5.Land is appraised at $65,000 and plant and equipment at $160,000.
6.It is estimated that the franchises can be sold for $15,000.
7.All the wages payable qualify for priority.
8.The mortgages are on the land and on a building with a book value of $110,000 and an appraised value of $100,000.The accrued interest on the mortgages is $7,500.
9.Estimated legal and accounting fees for the liquidation are $10,000.
Required
a.Prepare a statement of affairs as of December 31,20X8.
b.Compute the estimated percentage settlement to unsecured creditors.
   
Problem 43 (continued):

Accepted Answer

@#IMG-DLM& @#IMG-DLM& Problem

Question 6

What is defined as a condition in which a company is unable to meet debts as the debts mature?

Accepted Answer

A)  Deficit 
B)  Liability 
C)  Insolvency 
D)  Credit squeeze 
A)  Deficit 
B)  Liability 
C)  Insolvency 
D)  Credit squeeze

Question 7

A reorganization value in excess of amounts assignable to identifiable assets is:

Accepted Answer

A)  not reported. 
B)  reported as an intangible asset called Reorganization Value in Excess of Amounts Allocable to Identifiable Assets. 
C)  reported as Goodwill Associated with Exit or Disposal Activities. 
D)  passed on to prior shareholders of the company. 
A)  not reported. 
B)  reported as an intangible asset called Reorganization Value in Excess of Amounts Allocable to Identifiable Assets. 
C)  reported as Goodwill Associated with Exit or Disposal Activities. 
D)  passed on to prior shareholders of the company.

Question 8

Orville Company recently petitioned for bankruptcy and is now in the process of preparing a statement of affairs. The carrying values and estimated fair values of the assets of Orville Company are as follows:
Debts of Orville are as follows:
    
-Based on the preceding information,what is the total amount of unsecured claims?

Accepted Answer

A)  $113,000 
B)  $126,000 
C)  $93,000 
D)  $121,000 
A)  $113,000 
B)  $126,000 
C)  $93,000 
D)  $121,000

Question 9

Under the Bankruptcy Code,an insolvent corporation may be:
I.Reorganized.
II.Liquidated.

Accepted Answer

A)  I 
B)  II 
C)  Either I or II 
D)  Neither I nor II 
A)  I 
B)  II 
C)  Either I or II 
D)  Neither I nor II

Question 10

Typically,the plan of reorganization must be approved by at least _____ of all creditors,who must hold at least _____ of the dollar amount of the outstanding debt.

Accepted Answer

A)  one-third; half 
B)  two-thirds; half 
C)  half; one-third 
D)  half; two-thirds 
A)  one-third; half 
B)  two-thirds; half 
C)  half; one-third 
D)  half; two-thirds

Question 11

Under which nonjudicial action do creditors agree to assist the debtor in managing the most efficient payment of creditors' claims?

Accepted Answer

A)  Debt restructuring arrangement 
B)  Creditors' committee management 
C)  Transfer of assets 
D)  Composition agreement 
A)  Debt restructuring arrangement 
B)  Creditors' committee management 
C)  Transfer of assets 
D)  Composition agreement

Question 12

Which chapters of the Bankruptcy Code deal with corporations?

Accepted Answer

A)  Chapters 1, 3, and 5 
B)  Chapter 9 
C)  Chapters 7 and 11 
D)  Chapters 12 and 13 
A)  Chapters 1, 3, and 5 
B)  Chapter 9 
C)  Chapters 7 and 11 
D)  Chapters 12 and 13

Question 13

A debtor may file which type of petition when seeking judicial protection under the Bankruptcy Reform Act?
I.Voluntary
II.Involuntary

Accepted Answer

A)  I only 
B)  II only 
C)  Either I or II. 
D)  Neither I nor II 
A)  I only 
B)  II only 
C)  Either I or II. 
D)  Neither I nor II

Question 14

All of the following items are reported in a statement of realization and liquidation except:

Accepted Answer

A)  Cash 
B)  Prepaid assets 
C)  Depreciable assets (net) 
D)  Receiver's expenses 
A)  Cash 
B)  Prepaid assets 
C)  Depreciable assets (net) 
D)  Receiver's expenses

Question 15

Which of the following observations regarding the use of fresh start accounting is true?

Accepted Answer

A)  It is always required under Chapter 11 bankruptcy proceedings. 
B)  Prior shareholders will have control of the emerging company. 
C)  It results in a new reporting entity. 
D)  It is used under Chapter 7 bankruptcy proceedings. 
A)  It is always required under Chapter 11 bankruptcy proceedings. 
B)  Prior shareholders will have control of the emerging company. 
C)  It results in a new reporting entity. 
D)  It is used under Chapter 7 bankruptcy proceedings.

Question 16

In which of the following ways can debt be restructured?
I.Assets can be transferred to the creditor.
II.An equity interest can be granted to the creditor.
III.The terms of the debt can be modified.

Accepted Answer

A)  I and II only 
B)  I and III only 
C)  II and III only 
D)  I, II, and III 
A)  I and II only 
B)  I and III only 
C)  II and III only 
D)  I, II, and III

Question 17

On a debtor-in-possession income statement,which of the following items should be reported under the heading "Reorganization Items"?

Accepted Answer

A)  Sales 
B)  Selling expenses 
C)  Income tax benefit 
D)  Loss on disposal of assets 
A)  Sales 
B)  Selling expenses 
C)  Income tax benefit 
D)  Loss on disposal of assets

Question 18

Under Chapter 11 proceedings,what represents the fair value of the entity before considering liabilities and approximates the amount a willing buyer would pay for the entity's assets?

Accepted Answer

A)  Reorganization value 
B)  Fire sale value 
C)  Fresh start value 
D)  Excess value 
A)  Reorganization value 
B)  Fire sale value 
C)  Fresh start value 
D)  Excess value

Question 19

As defined by the Bankruptcy Code,creditors with priority:
I.have collateral claim against specific assets.
II.are unsecured creditors who have priority over other unsecured creditors.
III.are the first to be paid from any proceeds available to unsecured creditors.

Accepted Answer

A)  I only 
B)  II only 
C)  I, II and II 
D)  Both II and III 
A)  I only 
B)  II only 
C)  I, II and II 
D)  Both II and III

Question 20

What is the general form of the trustee's opening entry,accepting the assets of the debtor company?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Chapter 11 of the Bankruptcy Code provides for: I.Reorganization. II.Liquidation.

A "debtor-in-possession" balance sheet is prepared for a company which:

The Bankruptcy Reform Act contains chapters which deal with: I.Individuals. II.Corporations. III.Municipal governments.

"Preference payments" made by the debtor to one creditor to the detriment of all other creditors within 90 days before the bankruptcy petition was filed:

What is defined as a condition in which a company is unable to meet debts as the debts mature?

A reorganization value in excess of amounts assignable to identifiable assets is:

Under the Bankruptcy Code,an insolvent corporation may be: I.Reorganized. II.Liquidated.

Typically,the plan of reorganization must be approved by at least _ of all creditors,who must hold at least _ of the dollar amount of the outstanding debt.

Under which nonjudicial action do creditors agree to assist the debtor in managing the most efficient payment of creditors' claims?

Which chapters of the Bankruptcy Code deal with corporations?

A debtor may file which type of petition when seeking judicial protection under the Bankruptcy Reform Act? I.Voluntary II.Involuntary

All of the following items are reported in a statement of realization and liquidation except:

Which of the following observations regarding the use of fresh start accounting is true?

In which of the following ways can debt be restructured? I.Assets can be transferred to the creditor. II.An equity interest can be granted to the creditor. III.The terms of the debt can be modified.

On a debtor-in-possession income statement,which of the following items should be reported under the heading "Reorganization Items"?

Under Chapter 11 proceedings,what represents the fair value of the entity before considering liabilities and approximates the amount a willing buyer would pay for the entity's assets?

As defined by the Bankruptcy Code,creditors with priority: I.have collateral claim against specific assets. II.are unsecured creditors who have priority over other unsecured creditors. III.are the first to be paid from any proceeds available to unsecured creditors.

What is the general form of the trustee's opening entry,accepting the assets of the debtor company?

Intercorporate Acquisitions and Investments in Other Entities

Reporting Intercorporate Investments and Consolidation of Wholly Owned Subsidiaries With No Differential

The Reporting Entity and Consolidation of Less-Than-Wholly-Owned Subsidiaries With No Differentials

Consolidation of Wholly Owned Subsidiaries Acquired at More Than Book Value

Consolidation of Less-Than-Wholly-Owned Subsidiaries Acquired at More Than Book Value

Intercompany Inventory Transactions

Intercompany Transfers of Services and Noncurrent Assets

Intercompany Indebtedness

Appendix A: Intercompany Indebtedness

Consolidation Ownership Issues

Additional Consolidation Reporting Issues

Multinational Accounting: Foreign Currency Transactions and Financial Instruments

Multinational Accounting: Issues in Financial Reporting and Translation of Foreign Entity Statements

Segment and Interim Reporting

Sec Reporting

Partnerships: Formation,operation,and Changes in Membership

Partnerships: Liquidation

Governmental Entities: Introduction and General Fund Accounting

Governmental Entities: Special Funds and Government-Wide Financial Statements

Not-For-Profit Entities

Filters

Exam 20: Corporations in Financial Difficulty

Chapter 11 of the Bankruptcy Code provides for: I.Reorganization. II.Liquidation.

A "debtor-in-possession" balance sheet is prepared for a company which:

The Bankruptcy Reform Act contains chapters which deal with: I.Individuals. II.Corporations. III.Municipal governments.

"Preference payments" made by the debtor to one creditor to the detriment of all other creditors within 90 days before the bankruptcy petition was filed:

What is defined as a condition in which a company is unable to meet debts as the debts mature?

A reorganization value in excess of amounts assignable to identifiable assets is:

Under the Bankruptcy Code,an insolvent corporation may be: I.Reorganized. II.Liquidated.

Typically,the plan of reorganization must be approved by at least _____ of all creditors,who must hold at least _____ of the dollar amount of the outstanding debt.

Under which nonjudicial action do creditors agree to assist the debtor in managing the most efficient payment of creditors' claims?

Which chapters of the Bankruptcy Code deal with corporations?

A debtor may file which type of petition when seeking judicial protection under the Bankruptcy Reform Act? I.Voluntary II.Involuntary

All of the following items are reported in a statement of realization and liquidation except:

Which of the following observations regarding the use of fresh start accounting is true?

In which of the following ways can debt be restructured? I.Assets can be transferred to the creditor. II.An equity interest can be granted to the creditor. III.The terms of the debt can be modified.

On a debtor-in-possession income statement,which of the following items should be reported under the heading "Reorganization Items"?

Under Chapter 11 proceedings,what represents the fair value of the entity before considering liabilities and approximates the amount a willing buyer would pay for the entity's assets?

As defined by the Bankruptcy Code,creditors with priority: I.have collateral claim against specific assets. II.are unsecured creditors who have priority over other unsecured creditors. III.are the first to be paid from any proceeds available to unsecured creditors.

What is the general form of the trustee's opening entry,accepting the assets of the debtor company?

Intercorporate Acquisitions and Investments in Other Entities

Reporting Intercorporate Investments and Consolidation of Wholly Owned Subsidiaries With No Differential

The Reporting Entity and Consolidation of Less-Than-Wholly-Owned Subsidiaries With No Differentials

Consolidation of Wholly Owned Subsidiaries Acquired at More Than Book Value

Consolidation of Less-Than-Wholly-Owned Subsidiaries Acquired at More Than Book Value

Intercompany Inventory Transactions

Intercompany Transfers of Services and Noncurrent Assets

Intercompany Indebtedness

Appendix A: Intercompany Indebtedness

Consolidation Ownership Issues

Additional Consolidation Reporting Issues

Multinational Accounting: Foreign Currency Transactions and Financial Instruments

Multinational Accounting: Issues in Financial Reporting and Translation of Foreign Entity Statements

Segment and Interim Reporting

Sec Reporting

Partnerships: Formation,operation,and Changes in Membership

Partnerships: Liquidation

Governmental Entities: Introduction and General Fund Accounting

Governmental Entities: Special Funds and Government-Wide Financial Statements

Not-For-Profit Entities

Filters

Typically,the plan of reorganization must be approved by at least _ of all creditors,who must hold at least _ of the dollar amount of the outstanding debt.