21. Which statement is false concerning the liquidation basis of accounting?

a. Liabilities are reported at full book value, unless terms have been legally renegotiated.

b. Expected liquidation costs are netted against asset fair values.

c. Expected compensation to be paid is accrued as a liability, even if it has not yet been earned.

d. Previously unreported identifiable intangible assets are reported at fair value.

22. A company entering liquidation has reported assets with a book value of $900,000 and a liquidation value of $650,000. It also has previously unreported customer lists with a fair value of $50,000. Estimated liquidation costs are $40,000. The companys statement of net assets in liquidation reports total assets of:

a. $660,000

b. $900,000

c. $700,000

d. $650,000

23. A company entering liquidation has reported assets with a book value of $900,000 and a liquidation value of $600,000, and previously unreported customer lists with a fair value of $50,000. During the next month, it sells assets for $200,000. Remaining assets have a fair value of $460,000. The companys statement of changes in net assets in liquidation for the month reports a remeasurement gain or loss on assets of:

a. $240,000 loss

b. $60,000 gain

c. $140,000 loss

d. $10,000 gain

24. Following GAAP, the liquidation basis of accounting is appropriate

a. If the liquidation value of the companys assets is less than the companys liabilities.

b. If liquidation values are documented.

c. When it is extremely likely that liquidation will occur.

d. When a company declares bankruptcy.

25. Following the liquidation basis of accounting, the total income effect of liquidation is reported

a. As liquidation occurs.

b. At its estimated value, at the start of the liquidation process.

c. At the end of the liquidation process.

d. When obligations are paid.