ARISE Co. has suffered operating losses for some time, but is now operating profitably and expects to continue to do so. Current and projected income, however will not be sufficient to eliminate the deficit in the near term. It also appears that plant assets are overstated considering current prices and economic conditions. After receiving permission from the government authorities and approval from shareholders, the board of directors decides to restate the company assets and paid-in capital balances in order to remove the deficit and make possible the declaration of dividends from profitable- operations. A balance sheet for the company just prior to this action is presented: Current Assets 250,000 P.P.E 1,500,000 Accumulated Depreciation (600,000) Total 1,150,000 Liabilities 300,000 Ordinary shares, P10 par, 100,000 shares 1,000,000 100,000 (250,000) Share Premium Retained Earnings (deficit) Total 1,150,000 Assuming that the quasi reorganization shall be accomplished as follows: a. Property, plant and equipment are to be reduced to their present fair market value of P800,000 b. Inventories are to be written down by P50,000 c. Unaccrued liabilities shall be recognized at P150,000 d. Ordinary shares are to be reduced to a par value of P5 What is the balance of share premium after the quasi reorganization?
ARISE Co. has suffered operating losses for some time, but is now operating profitably and expects to continue to do so. Current and projected income, however will not be sufficient to eliminate the deficit in the near term. It also appears that plant assets are overstated considering current prices and economic conditions. After receiving permission from the government authorities and approval from shareholders, the board of directors decides to restate the company assets and paid-in capital balances in order to remove the deficit and make possible the declaration of dividends from profitable- operations. A balance sheet for the company just prior to this action is presented: Current Assets 250,000 P.P.E 1,500,000 Accumulated Depreciation (600,000) Total 1,150,000 Liabilities 300,000 Ordinary shares, P10 par, 100,000 shares 1,000,000 100,000 (250,000) Share Premium Retained Earnings (deficit) Total 1,150,000 Assuming that the quasi reorganization shall be accomplished as follows: a. Property, plant and equipment are to be reduced to their present fair market value of P800,000 b. Inventories are to be written down by P50,000 c. Unaccrued liabilities shall be recognized at P150,000 d. Ordinary shares are to be reduced to a par value of P5 What is the balance of share premium after the quasi reorganization?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:ARISE Co. has suffered operating losses for some time, but is now operating profitably
and expects to continue to do so. Current and projected income, however will not be
sufficient to eliminate the deficit in the near term. It also appears that plant assets are
overstated considering current prices and economic conditions. After receiving
permission from the government authorities and approval from shareholders, the board
of directors decides to restate the company assets and paid-in capital balances in order
to remove the deficit and make possible the declaration of dividends from profitable
operations. A balance sheet for the company just prior to this action is presented:
250,000
1,500,000
Current Assets
P.P.E
(600,000)
1,150,000
Accumulated Depreciation
Total
Liabilities
300,000
Ordinary shares, P10 par, 100,000 shares
1,000,000
100,000
(250,000)
Share Premium
Retained Earnings (deficit)
Total
1,150,000
Assuming that the quasi reorganization shall be accomplished as follows:
a. Property, plant and equipment are to be reduced to their present fair market
value of P800,000
b. Inventories are to be written down by P50,000
C. Unaccrued liabilities shall be recognized at P150,000
d. Ordinary shares are to be reduced to a par value of P5
What is the balance of share premium after the quasi reorganization?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
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,
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