Chapter 3 Corporate Liquidation and Reorganization-PROFE01
Chapter 3 Corporate Liquidation and Reorganization-PROFE01
Chapter 3 Corporate Liquidation and Reorganization-PROFE01
Learning Objectives
Corporate liquidation
Measurement basis
For assets, realizable value is estimated selling price less estimated costs to
sell.
Financial reports
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PROFE01-ACCOUNTING FOR SPECIAL TRANSACTIONS
1. Statement of affairs
Statement of affairs
1. Assets pledged to fully secured creditors – these are assets with realizable values
equal to or greater than the realizable values of the related liabilities for which these
assets have been pledged as security.
2. Assets pledged to partially secured creditors – these are assets with realizable
values less than the realizable values of the related liabilities for which these assets
have been pledged as security.
3. Free assets – these are assets that have not been pledged as security of liabilities.
These also include the excess of realizable values of assets pledged to fully secured
creditors over the realizable values of related liabilities for which these assets have been
pledged.
1. Unsecured liabilities with priority – these are liabilities that, although not secured by
any asset, are mandated by law to be paid first before any other unsecured liabilities.
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PROFE01-ACCOUNTING FOR SPECIAL TRANSACTIONS
2. Fully secured creditors – these are liabilities secured by assets with realizable values
equal to or greater than the realizable values of such liabilities.
3. Partially secured creditors – these are liabilities secured by assets with realizable
values less than the realizable values of such liabilities.
4. Unsecured liabilities without priority – all other liabilities not classifiable under (1), (2)
or (3) above.
Reference:
WEBSITE REFERENCES-http://www.iasplus.com/