Liquidation Basis of Accounting
On March 1, 2020, Farmworth Company is entering liquidation. The book value of its assets total $400,000, including $10,000 in cash, and the book value of its liabilities total $360,000. Additional information is as follows:
1. Expected proceeds from reported assets other than cash are:
Receivables, $30,000
Inventory, $70,000
Plant and equipment, $175,000
2. Expected costs of liquidating assets are $25,000.
Required
a. Calculate the cumulative effect of the adjustment to Farmworths net assets due to adoption of the liquidation basis of accounting.
Use a negative sign with your answer if the cumulative effect reduces net assets.
	$?
b. Prepare a statement of net assets in liquidation as of March 1, 2020
Use a negative sign with your net assets answer, if appropriate.
Farmworth Company Statement of Net Assets in Liquidation March 1, 2020
Assets
Cash	$
Receivables	$
Inventory	$
Plant and equipment	$
Total assets	$
Liabilities	$
Reported liabilities	$
Accrued liquidation cost	$
Total liabilities	$
Net assets	$