When Fresh-Start Reporting Is Used According to Statement of Position

question 27

Multiple Choice

When fresh-start reporting is used according to Statement of Position (SOP) 90-7 (now incorporated in FSB ASC topic 852) , the implication is that a new firm exists. Which of the following statements is NOT correct about fresh-start accounting?

• A) Assets are reported at fair values.
• B) Beginning retained earnings is reported at zero.
• C) The fair value of the assets must be less than the post liabilities and allowed claims.
• D) The original owners must own less than 50% of the voting stock after reorganization.

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Definitions:

Developmental Purposes

Activities or initiatives aimed at improving capabilities, skills, or infrastructure for better performance or growth.

Performance Reviews

Formal assessments where an employee's job performance is evaluated and discussed, typically on a regular basis, to identify strengths and areas for improvement.

Criterion Deficiency

A situation where the criteria used for evaluating performance do not fully capture or reflect the actual job performance.

Criterion Contamination

Refers to the situation where performance appraisals include factors irrelevant to the employee's actual job performance.