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During the two months ending June 30, 2020, the following transactions occur:
• Receivables of $48,000 are collected and the rest are determined to be uncollectible.
• Inventories are sold for $100,000.
• Plant and equipment is sold for $125,000.
• The identifiable intangible assets are sold for $72,000.
• Liquidation costs of $10,000 are paid.
• Bank loans of $325,000 are paid, and creditors holding $275,000 of loans agree to accept $250,000 as full payment.
• Fair values of remaining assets other than cash are:
• Inventories, $55,000
• Plant and equipment, $185,000
• Estimated future liquidation costs are $6,000.
-On the statement of changes in net assets in liquidation for the two months ending June 30, 2020, the remeasurement gain or loss on accrued liquidation costs is:

Question

Quizplus · Accepted Answer

The remeasurement gain or loss on accrued liquidation costs is the difference between the estimated future liquidation costs and the amount of liquidation costs paid. In this case, the estimated future liquidation costs are $6,000 and the amount of liquidation costs paid is $10,000. Therefore, the remeasurement gain or loss is a $4,000 loss.

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