Quiz-No.-2-PDF (1)

QUIZ NO. 2 - CORP LIQUIDATION, CONSIGNMENT SALES AND JOINT ARRANGEMENT Answer with Solutions Problem No. 1 The GCI Corporation is undergoing liquidation and has the following condensed Statement of Financial Position as of January 1, 2021: AssetsLiabilities and Shareholders' Equity CashP913,600Salaries PayableP400,000 Receivables2,726,400Accounts Payable868,000 Inventory640,000Mortgage Payable3,200,000 Prepaid Expenses20,000Loan Payable1,760,000 Building (net)2,760,000Note Payable640,000 Goodwill440,000Ordinary Shares960,000 Deficit(328,000) Total AssetsP7,500,000Total Liabilities andEquity P7,500,000 The mortgage payable is secured by the building having an estimated realizable value of P2,880,000. Accounts payable amounting to P480,000 is secured by the receivables amounting to P681,600 which is estimated to be collectible in the amount of P545,280. The balance in the recorded amount of the receivables which has an estimated realizable value of P1,880,000 is used to secure the loan payable. The inventory is estimated to be sold in the amount of P424,000. In addition to the recorded liabilities are accrued interest on mortgage payable amounting to P32,000, liquidation expenses amounting to P76,000 and taxes amounting to P32,000. (use two decimal places for the recovery percentage) Which of the following statements is wrong? a.The estimated deficiency to unsecured creditors is P365,120. b.Estimated payment to partially secured creditors is P3,138,861. c.Estimated payment to unsecured creditor without priority P755,991. d.Estimated loss on asset realization is P857,120 Problem No. 2 On January 1, 2018, SVEN Corp., a public entity and TINY Inc., a public entity, incorporated KUNKKA CO. which has its fiscal and operation autonomy. The contractual agreement of the incorporating entities provided that the decisions on relevant activities of KUNKKA will require the unanimous consent of both entities. SVEN and TINY will have rights to the net assets of KUNKKA. SVEN and TINY invested P1,000,000 and P1,500,000, respectively, equivalent to 40:60 capital interest of KUNKKA. The financial statements of KUNKKA provided the following data for its two-year operation: YEARNET INCOME (LOSS)DIVIDENDS DECLARED 2018P200,000P100,000 2019(2,000,000)0 Questions: 1.What is the balance of Investment in KUNKKA CO. to be reported by SVEN in its Statement of Financial Position on December 31, 2019? 2.What is the balance of investment in KUNKKA CO. to be reported by TINY in its Statement of Financial Position on December 31, 2019? Problem No. 3 On January 1, 2015, SME DAVION CORP. acquired a 35% equity of HUSKAR CORP. for P37,000. SME DAVION shares in the joint control over the strategic financial and operating decisions of HUSKAR CORP. Transactions costs of 5% of the purchase price of the shares were incurred by SME DAVION. On December 31, 2015, HUSKAR declared and paid a dividend of P24,000 for the year ended 2015. HUSKAR recognized a profit of P18,000 for that year.