After Eliminating the Deficit in a Reorganization Plan, a Balance

question 20

Multiple Choice

After eliminating the deficit in a reorganization plan, a balance may remain in Reorganization Capital.On the balance sheet, where would this account appear?

• A)​part of the Paid-In Capital
• B)​part of the dated balance in Retained Earnings
• C)​an Intangible Asset if the balance is a debit
• D)​a deferred credit amortized over a period not to exceed 40 years

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Definitions:

Opportunity Cost

The cost of forfeiting the next best alternative when making a decision or investment.

Next Best Use

An economic concept referring to the most profitable or valuable alternative use of a resource if it is not used in its current manner.

Prime Rate

The interest rate that commercial banks charge their most creditworthy customers, usually large corporations.

Present Value

The current value of a future sum of money or stream of cash flow given a specified rate of return.