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Excerpt from ASC 852-10-45-20
Predecessor |
Reorganization adjustments |
Fresh-start adjustments |
Successor |
|||||
Cash |
$ |
$ |
||||||
100 |
$ |
425 1 |
$ |
– |
$ |
525 |
||
Accounts receivable |
400 |
– |
– |
400 |
||||
Property, plant, & equipment |
2,000 |
– |
600 5 |
2,600 |
||||
Goodwill |
100 |
– |
100 5 |
200 |
||||
Intangible assets |
– |
– |
275 5 |
275 |
||||
Total assets |
$ |
2,600 |
$ |
425 |
$ |
975 |
$ |
4,000 |
Accounts payable |
400 |
– |
– |
400 |
||||
Accrued liabilities |
200 |
– |
– |
200 |
||||
Long-term debt |
– |
475 2 |
15 5 |
490 |
||||
Liabilities subject to compromise |
4,000 |
(4,000) 4 |
– |
– |
||||
Total liabilities |
$ |
4,600 |
$ |
(3,525) |
$ |
15 |
$ |
1,090 |
Predecessor common stock |
10 |
(10) 3 |
– |
|||||
Predecessor additional paid-in capital |
690 |
(690) 3 |
– |
|||||
Successor common stock |
– |
100 4 |
– |
100 |
||||
Successor additional paid-in capital |
– |
2,810 4 |
– |
2,810 |
||||
Retained earnings (accumulated deficit) |
(2,700) |
1,740 4 |
960 6 |
– |
||||
Total stockholders' equity (deficit) |
$ |
(2,000) |
$ |
3,950 |
$ |
960 |
$ |
2,910 |
Total liabilities and stockholders' equity |
$ |
2,600 |
$ |
425 |
$ |
975 |
$ |
4,000 |
(1) Reorganization adjustments reflect the sources and uses of cash on the effective date: |
||||||||
Sources: Proceeds from issuance of new term notes |
$ |
500 |
||||||
Uses: Payment of costs associated with obtaining the new term notes Payment of professional fees on the effective date directly attributed to the bankruptcy |
(25) (50) |
|||||||
Net cash activity on the effective date |
$ |
425 |
||||||
(2) Reorganization adjustments to reflect the issuance of new term notes on the effective date of $500, offset by $25 of issuance costs associated with obtaining the term notes |
||||||||
(3) Reorganization adjustment to reflect the cancellation of predecessor common stock and APIC in accordance with the plan of reorganization. It would also be acceptable to reflect this adjustment within the Fresh-start adjustments column. |
||||||||
(4) Reorganization adjustment to reflect the settlement of $4,000 of liabilities subject to compromise in accordance with the plan of reorganization as follows: |
||||||||
Liabilities subject to compromise |
$ |
4,000 |
||||||
New common stock and paid-in-capital used to satisfy lender claims |
(2,910) |
|||||||
Gain on settlement of liabilities subject to compromise |
$ |
1,090 |
||||||
(5) Fresh-start adjustments to PP&E, goodwill, intangible assets, and long-term debt reflect the adjustments of the assets and liabilities of the successor to their fair values, including intangible assets not previously recognized: |
||||||||
Property, plant, & equipment |
$ |
600 |
||||||
Goodwill (excess of reorganization value above identifiable assets) |
100 |
|||||||
Intangibles |
275 |
|||||||
Long-term debt |
(15) |
|||||||
Total adjustments |
$ |
960 |
||||||
(6) Fresh-start adjustment to retained earnings (accumulated deficit) to reset the accumulated deficit to zero. |
Enterprise value |
$3,400 |
Accounts payable |
400 |
Accrued liabilities |
200 |
Reorganization value |
$4,000 |
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