TOTAL ASSETS ( at NRV or FMV) © ASSETS PLEDGE TO FULLY SECURED CREDITORS * ASSETS PLEDGE TO PARTIALLY SECURED CREDITORS © FREE ASSETS: {a) Assets not pledged (b) Excess of Assets pledged to fully secured creditors TOTAL UABILITIES (at required amount to sett or BV) * UNSECURED DEBTS WITH PRIORITY (a) Administrative Expenses of Receiver (b) Unpaid Employee's salaries, wages and benefit plans (c) Corporate Crimes (d) Taxes (National, Provincial City/Municipal) (e} Corporate Torts (f Notarized Debts / Judgment Debts «FULLY SECURED DEBTS ‘= PARTIALLY SECURED DEBTS - SECURED PORTION Cash Available for Unsecured Liabilities (or Net Free Assets) [A] * UNSECURED DEBTS WITHOUT PRIORITY (a) Partially Secured Liabilities - Unsecured Portion {t) Purely Unsecured Liabilities Estimated Deficiency | B] RECOVERT RATE = A/B (Al Unsecured Debts with priority (8) Fully Secured Debts (C) Partially Secured Debts NAV of Asset pledge + Balance at Recovery rate (0) Unsecured Debts without priority Balance at Recovery rate aeTotal Assets (EXCEPT CASH) Assets To Be Liquidated Assets Liquidated Assets Acquired - new Assets Not Liquidated Total Liabilities Uabilities Liquidated Liabilities To Be Liquidated Liabilitles Not Liquidated Liabilities Incurred - new Notes: * The receiver normally open NEW accounting books for the liquidating corporation and RECORDS assets and liabilities at thelr BOOK VALUES * The DIFFERENCE of corporation's assets and liabilities Is CLOSED to ESTATE EQUITY account. * During liquidation process, the following are DIRECTLY CLOSED to ESTATE EQUITY account: 1. Unrecorded assets and liabilities arises (new) 2. Expenses and Revenues during liquidation 3. Gains and Losses upon realization of assets Special Notes: ™ Insolvency means sum of debts > sum of assets of corporation at FV ~ In times af insolvency, corporation has 3 alternatives: 1, Liquidation - operation ceases (voluntary) 2. Debt Restructuring - operation continues (if accepted by the parties) 3. Reorganization - operation continues (if accepted by the parties) ~ Statements to he prepared: * by the liquidating corporation: 1. Statement of Affairs - prepared by corporation before liquidation - mot a going concern statement, thus historical cost are IRRELEVANT © by the receiver / trustee assigned by SEC: 1, Statement of Cash Receipts and Disbursement 2. Statement of Estate Equity (Deficit) 3. Statement of Realization and Liquidation* Units moy be produced with some DEFECTS requiring some REWORK or effortta correct such defect. Thus, on ADDITIONAL COST thot will be incurred should be ADDED or CAPITALIZED to production cost A. CHARGEABLE TO ALL PRODUCTION “if Rework is due to Internal Failure tnitial Costef ADIUSTED Cost Rework COST DM Cost 00 . 10x DL Cost so - HX. OH Cost oe + 700K Total Cost xxx : 200 NOTES: +» Addtional Cost for Rework is CHARGED TO FOH. Thus, TOTAL COST & UNIT COST for that specific Job order REMAINS THE SAME 5. CHARGEABLE TO SPECIFIC 108 ORDER if Rework is due to Customers Specification Initial = Costof ADJUSTED. Cost Rework COST DM Cost KK 1x RK DL Cost 000 10x 7001 GH Cost xx cod wax, Total Cost xxx NOTES: * Additionol Cost for Rework is CHARGED TO SPECIFIC JOB ORDER, Thus, TOTAL COST & UNIT COST for thot specific job order WILL INCREASE Total Cost of Production OO — = Unit Cost Total Number ef Units Produced * Observe that the COST INCREASES but te NUMBER OF UNITS REMAINS THE SAME