31. Adverse financial and operating circumstances warrant that AAA Company undergo a quasi-reorganizationat December 31, 2013. The following information may be relevant in accounting for the quasireorganization.• Inventory with a fair value of P1,000,000 is currently recorded in the accounts at its cost ofP1,500,000Plant assets with a fair value of P3,000,000 are currently recorded at P4,000,000 net of accumulateddepreciation.Unrecorded accounts payable amount to P300,000Individual shareholders contribute P1,500,000 to create Share premium to facilitate thereorganization. No new shares pass to the company's shareholders.The par value of the share capital is reduced from P100 to P50Immediately before these events, the shareholders' equity section appears as follows.Share capital, P100 par value 50,000 shares,Share premiumAccumulated profits (deficit)After the quasi-reorganization, the total shareholders' equity should be5,000,000500,0002,000,000)Pa. 3,200,000b. 2,500,000c. 1,700,000d. 1,000,000

A quasi-reorganization enables a corporation to remove a retained earnings shortfall by restating…

financial and operating circumstances warrant that AAA Company ember 31, 2013. The following information may be relevant ization. entory with a fair value of P1,000,000 is currently recorded in the ao 500,000 at assets with a fair value of P3,000,000 are currently recorded at P4 reciation. ecorded accounts payable amount to P300,000 vidual shareholders contribute P1,500,000 to create Share premium ganization. No new shares pass to the company's shareholders. par value of the share capital is reduced from P100 to P50 ately before these events, the shareholders' equity section appears re capital, P100 par value 50,000 shares, re premium umulated profits (deficit)

financial and operating circumstances warrant that AAA Company ember 31, 2013. The following information may be relevant ization. entory with a fair value of P1,000,000 is currently recorded in the ao 500,000 at assets with a fair value of P3,000,000 are currently recorded at P4 reciation. ecorded accounts payable amount to P300,000 vidual shareholders contribute P1,500,000 to create Share premium ganization. No new shares pass to the company's shareholders. par value of the share capital is reduced from P100 to P50 ately before these events, the shareholders' equity section appears re capital, P100 par value 50,000 shares, re premium umulated profits (deficit)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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FFF Company had sustained heavy losses over a period of time and conditions warrant that the entity should undergo a quasi-reorganization on December 31, 2020.-Inventory with cost of P6,500,000 was recorded on December 31, 2020 at the market value of P6,000,000-Property, Plant and Equipment were recorded on December 31, 2020 at P12,000,000, net of accumulated depreciation. The sound value was P8,000,000-On December 31, 2020, the share capital is P7,000,000 consisting of 700,000 shares with par value of P10, the share premium is P1,600,000, and the deficit in retained earnings is P900,000-The par value of the share is to be reduced from P10 to P5Immediately after the quasi-reorganization, what is the total shareholders' equity?
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