Kansas city corporation holds three assets when it comes

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Reference no: EM13376681

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 re-organization, where should it be reported? What happens to this balance?

Reference no: EM13376681

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