ew Favorites Tools Help Balser, Annarose - Outloo....Canvas Connect New tab 4 Pr
ID: 2519675 • Letter: E
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ew Favorites Tools Help Balser, Annarose - Outloo....Canvas Connect New tab 4 Problem 13-38 (Algorithmic) (LO. 2) Sea Green Enterprises has the following assets and liabilities on its balance sheet Net Book Value $360,000 108,000 Fair Market Value Assets $540,000 Labilities 108,000 Algo Sea Green has just lost a product liability suit with damages of $5,400,000 being awarded to the plaintiff. Although Sea Green wil appeal the judgment, legal counsel indicates the judgment is highly unlikely to be overturned by the appellate court. The product liability insurance carried by Sea Green has a policy ceiling of $3,240,000 what is the amount of lablity of sea Green Enterprises and its owners if the business entity is a sole proprietorship, a partrshi, ac corporation, and an S corporation? If an amount is zero, enter "0 a. If the form of the business entity is a sole proprietorship, the owner is ultimately liable for and partners are ultimately If the form of the business entity is a partnership, the partnership is ultimately liable for liable for and the shareholders of c. If the form of the business entity is a C corporation, the C corporation is ultimately liable for the C corporation are ultimately liable for $ 827 PM here to searchExplanation / Answer
$
Product liability suit with damages
5400000
Product liability insurance carried by sea green
-3240000
Amount Soleproprietor is liabile to pay
2160000
Net FMV of net assets (540,000-108000)
432000
Owner is ultimately liable for
1728000
$
Product liability suit with damages
5400000
Product liability insurance carried by sea green
-3240000
Amount Partnership and partners are liabile to pay
2160000
Net FMV of net assets (540,000-108000)
432000
Partner is ultimately liable for
1728000
A C corporation has a limited liability that is equal to FMV of assets $540,000. So the shareholders of C corporation will not have any responsible for remaining corporate debts i.e creditors of $108,000
$
Product liability suit with damages
5400000
Product liability insurance carried by sea green
-3240000
Amount C corporation is ultimately liable for
2160000
Net FMV of net assets
540000
Amount shareholders are ultimately liable for
1620000
explanation same as C above
$
Product liability suit with damages
5400000
Product liability insurance carried by sea green
-3240000
Amount Soleproprietor is liabile to pay
2160000
Net FMV of net assets (540,000-108000)
432000
Owner is ultimately liable for
1728000
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