GEN COMBO LOOSELEAF INTERMEDIATE ACCOUNTING; CONNECT ACCESS CARD
9th Edition
ISBN: 9781260089042
Author: J. David Spiceland
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 18, Problem 18.13P
(1)
To determine
Quasi Reorganization
Quasi reorganization would be approved by the board of directors and shareholders of the company, when a company is undergoing in financial difficulties, but expecting growth in the future. This provision is used to reduce the deficit or accumulated shortage or debit balance in the retained earnings by revaluing assets, liabilities, and shareholders’ equity, under unfavorable circumstances.
To journalize: The quasi reorganization transactions for Corporation CC.
(2)
To determine
To prepare:
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Logan Corp. has incurred losses from operations for many years. At the recommendation of the newly hired president, the board of directors noted to implement a quasi-reorganization, subject to the stockholders' and creditors' approval. Immediately, prior to the quasi-reorganization, on June 30, 2016, Logan's balance sheet was as follows:
Assets
Current assets P1,375,000
Property, plant and equipment 3,375,000
Other noncurrent assets 500,000
Total assets P5,250,000
Liabilities and Stockholders' Equity
Total liabilities P1,500,000
Ordinary shares, P10 par value…
Jade Company has been incurring losses for several years. On December 31, 2019, the SEC permitted Jade to implement a quasi-reorganization after due approval from its shareholders and creditors. Its balance sheet before quasi-reorganization is as follows. [Refer to the figure]The quasi-reorganization plan provides the following:• The PPE shall be revalued at an appraised amount of P8,500,000.• Goodwill shall be written off in full.• Par value shall be reduced by forty percent.• The deficit shall be wiped out firstly from Revaluation Surplus and any unabsorbed amount from Share Premium.
Cash
400,000
Inventory
5,200,000
Property, Plant and Equipment
8,200,000
Goodwill
200,000
Liabilities
4,450,000
Share Premium
3,200,000
Deficit
2,150,000
Questions:
1. How much is the total assets after the quasi-reorganization?
2. How much is the Share Premium after the quasi-reorganization?
3. How much is the Retained Earnings after the quasi-reorganization?
Mario Company has been incurring losses for several years. On December 31, 2019, the SEC permitted Mario to implement a quasi-reorganization after due approval from its shareholders and creditors. Its balance sheet before quasi-reorganization is as follows. [Refer to the figure]The quasi-reorganization plan provides the following:• The PPE shall be revalued at an appraised amount of P8,500,000.• Goodwill shall be written off in full.• Par value shall be reduced by forty percent.• The deficit shall be wiped out firstly from Revaluation Surplus and any unabsorbed amount from Share Premium.1. How much is the total assets after the quasi-reorganization?
2. How much is the Share Premium after the quasi-reorganization?
3. How much is the Retained Earnings after the quasi-reorganization?
Chapter 18 Solutions
GEN COMBO LOOSELEAF INTERMEDIATE ACCOUNTING; CONNECT ACCESS CARD
Ch. 18 - Identify and briefly describe the two primary...Ch. 18 - Prob. 18.2QCh. 18 - Prob. 18.3QCh. 18 - Prob. 18.4QCh. 18 - Prob. 18.5QCh. 18 - Prob. 18.6QCh. 18 - Prob. 18.7QCh. 18 - What is meant by a shareholders preemptive right?Ch. 18 - Terminology varies in the way companies...Ch. 18 - Most preferred shares are cumulative. Explain what...
Ch. 18 - The par value of shares historically indicated the...Ch. 18 - Prob. 18.12QCh. 18 - How do we report components of comprehensive...Ch. 18 - The balance sheet reports the balances of...Ch. 18 - At times, companies issue their shares for...Ch. 18 - Prob. 18.16QCh. 18 - The costs of legal, promotional, and accounting...Ch. 18 - When a corporation acquires its own shares, those...Ch. 18 - Discuss the conceptual basis for accounting for a...Ch. 18 - The prescribed accounting treatment for stock...Ch. 18 - Brandon Components declares a 2-for-1 stock split....Ch. 18 - What is a reverse stock split? What would be the...Ch. 18 - Suppose you own 80 shares of Facebook common stock...Ch. 18 - Prob. 18.24QCh. 18 - Comprehensive income LO181 Schaeffer Corporation...Ch. 18 - Stock issued LO184 Penne Pharmaceuticals sold 8...Ch. 18 - Prob. 18.3BECh. 18 - Prob. 18.4BECh. 18 - Prob. 18.5BECh. 18 - Retirement of shares LO185 Agee Storage issued 35...Ch. 18 - Treasury stock LO185 The Jennings Group...Ch. 18 - Prob. 18.8BECh. 18 - Prob. 18.9BECh. 18 - Cash dividend LO188 Real World Financials...Ch. 18 - Effect of preferred stock on dividends LO187 The...Ch. 18 - Property dividend LO187 Adams Moving and Storage,...Ch. 18 - Stock dividend LO188 On June 13, the board of...Ch. 18 - Prob. 18.14BECh. 18 - Stock split LO188 Refer to the situation...Ch. 18 - Prob. 18.16BECh. 18 - Comprehensive income LO182 The following is from...Ch. 18 - Prob. 18.2ECh. 18 - Earnings or OCI? LO182 Indicate by letter whether...Ch. 18 - Stock issued for cash; Wright Medical Group LO184...Ch. 18 - Issuance of shares; noncash consideration LO184...Ch. 18 - Prob. 18.6ECh. 18 - Share issue costs; issuance LO184 ICOT Industries...Ch. 18 - Reporting preferred shares LO184, LO187 Ozark...Ch. 18 - Prob. 18.9ECh. 18 - Prob. 18.10ECh. 18 - Retirement of shares LO185 In 2018, Borland...Ch. 18 - Treasury stock LO185 In 2018, Western Transport...Ch. 18 - Treasury stock; weighted-average and FIFO cost ...Ch. 18 - Prob. 18.14ECh. 18 - Prob. 18.15ECh. 18 - Prob. 18.16ECh. 18 - Transact ions affecting retained earnings LO186,...Ch. 18 - Effect of cumulative, nonparticipating preferred...Ch. 18 - Stock dividend LO188 The shareholders equity of...Ch. 18 - Prob. 18.20ECh. 18 - Cash in lieu of fractional share rights LO188...Ch. 18 - Prob. 18.22ECh. 18 - Transact ions affecting retained earnings LO186...Ch. 18 - Profitability ratio LO181 Comparative balance...Ch. 18 - Prob. 18.25ECh. 18 - Various stock transactions; correction of journal...Ch. 18 - Share buybackcomparison of retirement and treasury...Ch. 18 - Reacquired sharescomparison of retired shares and...Ch. 18 - Prob. 18.4PCh. 18 - Shareholders equity transactions; statement of...Ch. 18 - Prob. 18.6PCh. 18 - Prob. 18.7PCh. 18 - Prob. 18.8PCh. 18 - Effect o f preferred stock characteristics on...Ch. 18 - Prob. 18.10PCh. 18 - Stock dividends received on investments;...Ch. 18 - Various shareholders equity topics; comprehensive ...Ch. 18 - Prob. 18.13PCh. 18 - Prob. 18.1BYPCh. 18 - Prob. 18.2BYPCh. 18 - Research Case 184 FASB codification; comprehensive...Ch. 18 - Judgment Case 185 Treasury stock; stock split;...Ch. 18 - Prob. 18.6BYPCh. 18 - Prob. 18.7BYPCh. 18 - Prob. 18.8BYPCh. 18 - Prob. 1CCTC
Knowledge Booster
Similar questions
- Journal entries Logan Corp. has incurred losses from operations for many years. At the recommendation of the newly hired president, the board of directors noted to implement a quasi-reorganization, subject to the stockholders' and creditors' approval. Immediately, prior to the quasi-reorganization, on June 30, 2016, Logan's balance sheet was as follows: AssetsCurrent assets P1,375,000 Property, plant and equipment 3,375,000 Other noncurrent assets 500,000Total assets P5,250,000 Liabilities and Stockholders' Equity Total liabilities P1,500,000Ordinary shares, P10 par value 4,000,000 Additional paid-in capital 750,000Deficit (1,000,000)Total liabilities and stockholders' equity P5,250,000The stockholders and creditors approved the quasi-reorganization effective July 1, 2016, to be accomplished by a reduction in property, plant, and equipment (net) P875,000, a reduction in other noncurrent assets of P375,000, and a reduction in par value from P10 to P5.arrow_forward4. After the quasi-reorganization, the total shareholders' equity should be? * Adverse financial and operating circumstances warrant that BLACK PANTHER Corporation undergo a quasi- reorganization on December 31, 2021. The following information may be relevant in accounting for the quasi- reorganization: a. Inventory with a fair value of P1,000,000 is currently recorded in the accounts at its cost of P1,500,000. b. Plant assets with a fair value of P3,000,000 are currently recorded at P4,000,000, net of accumulated depreciation. c. Unrecorded accounts payable amount to P300,000 d. Individual shareholders contribute P1,500,000 to create additional paid-in capital to facilitate the reorganization. No new shares pass to the company's shareholders. e. The par value of the share capital is reduced from P100 to P50. f. Immediately before these events, the shareholders' equity section appears as follows: P 5,000,000 Share capital, P100 par value, 50,000 shares Share premium Retained earnings…arrow_forwardAdverse financial and operating circumstances warrant that Solid Company should undergo a quasi-reorganization at year-end. Inventory with a fair value of P2,000,000 is currently recorded at cost of P2,500,000. Plant assets with a fair value of P7,000,000 are currently recorded at P8,500,000, net of accumulated depreciation: Individual shareholders contribute P4,000,000 to create additional capital to facilitate the quasi-reorganization. No new shares are issued. * The par value of the share is reduced from P25 to P5. The entity reported the following shareholders' equity prior to the quasi-reorganization: Share capital, P25 par, 100,000 shares outstanding Share premium 2,500,000 1,750,000 Retained earnings (deficit) (3,000,000) After the quasi-organization, what amount should be reported as share premium? a. 2,750,000 b. 3,250,000 c. 3,750,000 d. 1,750,000arrow_forward
- An entity was reporting losses for several years. The board of directors and shareholders approved a quasi-reorganization. The reorganization included reducing inventory and land by P300,000 and P800,000 respectively. Immediately before the restatement, the entity had the following balances: Share capital (320,000 issued shares, P10 par) - 3,200,000 Share premium - 800,000 Retained eamings (deficit) - (400,000) What is the reduction in total par value of shares to fully eliminate the deficit?arrow_forwardAssuming that the quasi reorganization shall be accomplished as follows: Property, plant and equipment are to be reduced to their fair market value of P800,000. Inventories are to be written down by P50,000. • Unaccrued obligation shall be recognized at P150,000. • The par value of ordinary Shares will be reduced to P5. 1. What is the balance of the retained earnings account as of 31 December 2019? Assuming that the quasi reorganization shall be accomplished as follows: Property, plant and equipment are to be reduced to their fair market value of P800,000. Inventories are to be written down by P50,000. • Unaccrued obligation shall be recognized at P150,000. • The par value of ordinary Shares will be reduced to P5. 2. What is the balance of the retained earnings account as of 31 December 2019?arrow_forward31. Adverse financial and operating circumstances warrant that AAA Company undergo a quasi-reorganization at December 31, 2013. The following information may be relevant in accounting for the quasi reorganization. • Inventory with a fair value of P1,000,000 is currently recorded in the accounts at its cost of P1,500,000 Plant assets with a fair value of P3,000,000 are currently recorded at P4,000,000 net of accumulated depreciation. Unrecorded accounts payable amount to P300,000 Individual shareholders contribute P1,500,000 to create Share premium to facilitate the reorganization. No new shares pass to the company's shareholders. The par value of the share capital is reduced from P100 to P50 Immediately before these events, the shareholders' equity section appears as follows. Share capital, P100 par value 50,000 shares, Share premium Accumulated profits (deficit) After the quasi-reorganization, the total shareholders' equity should be 5,000,000 500,000 2,000,000) P a. 3,200,000 b.…arrow_forward
- What happens to this balance? LO 13-9 41. Jaez Corporation is in the process of going through a reorganization. As of December 31, 2020, the company's accountant has determined the following information although the company is still several months away from emerging from the bankruptcy proceeding. Prepare a balance sheet in the appropriate form. Book Value Fair Value Assets Cash $ 23,000 $ 23,000 Inventory 45,000 47,000 Land 140,000 210,000 Buildings 220,000 260,000 Equipment 154,000 157,000 Allowed Expected Claims Settlement Liabilities as of the date of the order for relief Accounts $ 123,000 $ 20,000 payable Accrued 30,000 4,000 expenses Income taxes 22,000 18,000 рayable Note payable 100,000 100,000 (due 2023, secured by land) Note payable 170,000 80,000 (due 2025) Liabilities since the date of the order for relief Accounts $ 60,000 payable Note payable 110,000 (due 2022) Stockholders' equity Common stock $ 200,000 Deficit (233,000) LO 13-10 42. Ristoni Company is in the process of…arrow_forwardThe Larisa Company is exiting bankruptcy reorganization with the following accounts: Book Value Fair Value Receivables $ 87,000 $ 104,000 Inventory 207,000 224,000 Buildings 307,000 414,000 Liabilities 307,000 307,000 Common stock 337,000 Additional paid-in capital 34,000 Retained earnings (deficit) (77,000 ) The company's assets have a $787,000 reorganization value. As part of the reorganization, the company's owners transferred 70 percent of the outstanding stock to the creditors. Record the entry to reduce additional paid in capital balance to correct figure, to close out gain account, and to eliminate deficit.arrow_forwardThe Larisa Company is exiting bankruptcy reorganization with the following accounts: Book Value Fair Value Receivables $ 95,000 $ 120,000 Inventory 215,000 240,000 Buildings 315,000 430,000 Liabilities 315,000 315,000 Common stock 345,000 Additional paid-in capital 50,000 Retained earnings (deficit) (85,000 ) The company's assets have a $835,000 reorganization value. As part of the reorganization, the company's owners transferred 70 percent of the outstanding stock to the creditors. Prepare the journal entry (or entries) necessary to adjust the company’s records to fresh start accounting. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)arrow_forward
- The Larisa Company is exiting bankruptcy reorganization with the following accounts: Book Value Fair Value Receivables $ 87,000 $ 104,000 Inventory 207,000 224,000 Buildings 307,000 414,000 Liabilities 307,000 307,000 Common stock 337,000 Additional paid-in capital 34,000 Retained earnings (deficit) (77,000 ) The company's assets have a $787,000 reorganization value. As part of the reorganization, the company's owners transferred 70 percent of the outstanding stock to the creditors. 1) Record the entry to adjust asset values to fair value. 2) Record the entry to reduce additional paid in capital balance to correct figure, to close out gain account, and to eliminate deficit.arrow_forwardThe Larisa Company is exiting bankruptcy reorganization with the following accounts: Book Value Fair Value Receivables $ 87,000 $ 104,000 Inventory 207,000 224,000 Buildings 307,000 414,000 Liabilities 307,000 307,000 Common stock 337,000 Additional paid-in capital 34,000 Retained earnings (deficit) (77,000 ) The company's assets have a $787,000 reorganization value. As part of the reorganization, the company's owners transferred 70 percent of the outstanding stock to the creditors. Prepare the journal entry (or entries) necessary to adjust the company’s records to fresh start accounting. Record the entry to reduce additional paid in capital balance to correct figure, to close out gain account, and to eliminate deficit.arrow_forwardOn July 31, 2020, Ivanhoe Company paid $3,000,000 to acquire all of the common stock of Conchita Incorporated, which became a division (a reporting unit) of Ivanhoe. Conchita reported the following balance sheet at the time of the acquisition. Current assets $750,000 Current liabilities $500,000 Noncurrent assets 2,700,000 Long-term liabilities 400,000 Total assets $3,450,000 Stockholders’ equity 2,550,000 Total liabilities and stockholders’ equity $3,450,000 It was determined at the date of the purchase that the fair value of the identifiable net assets of Conchita was $2,755,000. Over the next 6 months of operations, the newly purchased division experienced operating losses. In addition, it now appears that it will generate substantial losses for the foreseeable future. At December 31, 2020, Conchita reports the following balance sheet information. Current assets $480,000 Noncurrent assets…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education