of cash, recoverable income taxes, and notes receivable. The Company believes that its current cash position and cash generated from the collection of its remaining assets will be sufficient to meet its current obligations, to fund ABC's wind‐down operations, and allow the Company to pay liquidation distributions (see Note X). The Company expects to complete its liquidation over the ensuing 6 to 12 months.
Financial Statement Presentation In preparing these financial statements, the Company has evaluated events and transactions for potential recognition through March 2, 20X1, the date the financial statements were issued.
The consolidated financial statements include the accounts of ABC, Inc. and Forest Commerce Center, Inc., the Company's real estate subsidiary whose assets were sold at March 31, 20X0. Upon consolidation, all intercompany accounts and transactions are eliminated.
The Company considers cash and other highly liquid investments, with less than 90‐day maturities, as cash and cash equivalents. Cash and cash equivalents are stated at cost, which approximates liquidation value. The majority of cash and cash equivalents were federally insured.
Adoption of the Liquidation Basis of Accounting As a result of the Company's shareholders’ approval of the Plan of Complete Dissolution, the Company adopted the liquidation basis of accounting effective December 5, 20X1. This basis of accounting is considered appropriate when liquidation of a company is imminent. Under this basis of accounting, assets are valued at the expected cash proceeds from liquidation, and liabilities are stated in accordance with GAAP that otherwise applies. The entity is also required to accrue and separately present costs that it expects to incur and the income it expects to earn during the expected duration of the liquidation. The conversion from the going concern to liquidation basis of accounting required management to make significant estimates and judgments to record assets and liabilities. These estimates are subject to change based upon the timing of potential sales and further deterioration of the market.
The Company will continue to incur operating costs and receive income on its investments and cash and cash equivalents throughout the liquidation period. On a regular basis management evaluates assumptions, judgments, and estimates that can have a significant impact on reported assets in liquidation based on the most recent information available to us, and when necessary makes changes accordingly. Actual costs and income may differ from estimates, which might reduce assets available in liquidation to be ultimately distributed to shareholders.
Accrued Liquidation Costs The Company is required to make significant estimates and exercise judgment in determining accrued liquidation costs. The Company reviewed all operating expenses and contractual commitments such as payroll and related expenses, lease termination costs, professional fees, and other outside services to determine the estimated costs to be incurred during the liquidation period. Accordingly, estimated expenses anticipated to occur from December 5, 20X0 through final liquidation were accrued in the consolidated statement of net assets as of December 31, 20X0 and March 31, 20X1 prepared on a liquidation basis.
The accrued costs expected to be incurred in liquidation and recorded payments, since March 31, 20X0 made related to the accrued liquidation costs are as follows:
| Accrued Liquidation Costs | As Booked March 31, 20X0 | Adjustments to Reserve | Payments | Balance at December 31, 20X0 |
| Payroll related costs | $ 777 | $0 | $ (363) | $ 192 |
| Contractual commitments | 52 | 0 | (52) | 0 |
| Professional services | 144 | 0 | (1) | 143 |
| Insurance, taxes, and other | 1,016 | 148 | (172) | 992 |
| Total | $1,989 | $148 | $ (734) | $ 1,404 |
Expenses during the liquidation period are continually reviewed in order to insure that the overall cost structure during the wind down of the Company is reduced to minimal levels necessary to effectively manage the liquidation.
Example 2.13: Liquidation Is Not Imminent
Organization and Nature of Business As a result of the factors described below, the Company has no meaningful revenue‐producing operations. Historically, the Company has operated an investment banking business, predominately fixed‐income sales and trading and financial advisory services, through three principal business units: Investment Banking, Diamond Star Investments, and Credit Products. The Company also engaged in residential mortgage lending operations through Family Funding, Inc. (“Family Funding”) until this business was discontinued, and the business sold to North Star Residential, Inc. (“North Star”), in February 20X3 (the “North Star Transaction”).
The Company has disclosed previously various uncertainties that had adversely impacted counterparty relationships, employee turnover, and operating results. Those factors impacted the overall stability of the Company. During the second quarter of 20X3, the Company's Board of Directors approved plans to discontinue operations in its Diamond Star Investments (including Western Financial Services [“Western“]) and Homeland Products divisions (together, “Fixed Income” or the “Fixed Income businesses”) as well as, later in the quarter, its Investment Banking division. Exiting these businesses impacted approximately 125 employees. As of December 14, 20X3, the Company had approximately 30 employees. Refer to Notes 20 and 21 herein for additional information.
The Company is evaluating several strategic alternatives in order to preserve and maximize stockholder value. These include:
Pursuing a strategic transaction with a third party, such as a merger or sale of the Company;
Reinvesting the Company's liquid assets in favorable opportunities; and
Winding down the Company's remaining operations and distributing its net assets, after making appropriate reserves, to its stockholders.
The Company does not believe that discontinuing the businesses referenced above will have a significant near‐term impact on its liquidity. The Company's liquidity needs will depend to a large extent on decisions it makes regarding the alternatives described above and its future business operations, generally. The Company's available liquidity, which consists primarily of cash, is currently anticipated to be sufficient to meet its ongoing financial obligations for a reasonable period of time.
Example 2.14: Going Concern—Substantial Doubt Remains—Contingent on Raising Capital
As shown in the accompanying consolidated financial statements the Company has incurred recurring losses of $688,217 and $709,913 for the years ended June 30, 20X8 and 20X7 respectively, and has incurred a cumulative loss of $4,075,605 since inception (November 14, 20X1). The Company is currently in the development stage and has spent a substantial portion of its time in the development of its technology.
There is no guarantee
