Early in January 2020, Hopkins plc is preparing for a meeting with its bankers to discuss a loan request. Its bookkeeper provided the following accounts and balances at December 31, 2019.

Debit Credit Inventory 65,300 Accounts Receivable (net) 38,500 Cash 75,000 Equipment (net) 84,000 Patents 15,000 Notes and Accounts Payable 52,000 Notes Payable (due 2021) 75,000 Share CapitalOrdinary 100,000 Retained Earnings 50,800 277,800 277,800

Except for the following items, Hopkins has recorded all adjustments in its accounts. 1. Net accounts receivable is comprised of 52,000 in accounts receivable and 13,500 in allowance for doubtful accounts. 2. Cash includes 500 petty cash and 15,000 in a bond sinking fund. 3. Equipment had a cost of 112,000 and accumulated depreciation of 28,000. 4. On January 8, 2020, one of Hopkins' customers declared bankruptcy. At December 31, 2019, this customer owed Hopkins 9,000.

Accounting Prepare a corrected December 31, 2019, statement of financial position for Hopkins plc.

Analysis Hopkins' bank is considering granting an additional loan in the amount of 45,000, which will be due December 31, 2020. How can the information in the statement of financial position provide useful information to the bank about Hopkins' ability to repay the loan?

Principles In the upcoming meeting with the bank, Hopkins plans to provide additional information about the fair value of its equipment and some internally generated intangible assets related to its customer lists. This information indicates that Hopkins has significant unrealized gains on these assets, which are not reflected on the statement of financial position. What objections are the bank likely to raise about the usefulness of this information in evaluating Hopkins for the loan renewal?