Bacolod Company approved the following reorganization at year-end: 1. The preference share capital is to be exchanged fo P2,000,000 of 10% debenture bonds. 2. Goodwill is to be written off. 3. The property, plant and equipment are appraised by independent expert at a replacement cost of P12,000,000 The SEC approved the revaluation of the property, plant and equipment to give effect to the reorganization. 4. The resulting deficit is to be offset against the revaluation surplus. Statement of financial position at year-end Assets Cash 425,000 1,325,000 Other current assets Property, plant and equipment Less accumulated depreciation Goodwill 8,000,000 2,000,000 6,000,000 500,000 Total assets 8,250,000 Liabilities and Shareholders' Equity Current liabilities Preference share capital, 12% cumulative, P100 par Ordinary share capital, 50,000 shares, P100 par Share premium Retained earnings 2,000,000 1,500,000 5,000,000 750,000 ( 1,000,000) Total liabilities and shareholders' equity 8,250,000

Bacolod Company approved the following reorganization at year-end: 1. The preference share capital is to be exchanged fo P2,000,000 of 10% debenture bonds. 2. Goodwill is to be written off. 3. The property, plant and equipment are appraised by independent expert at a replacement cost of P12,000,000 The SEC approved the revaluation of the property, plant and equipment to give effect to the reorganization. 4. The resulting deficit is to be offset against the revaluation surplus. Statement of financial position at year-end Assets Cash 425,000 1,325,000 Other current assets Property, plant and equipment Less accumulated depreciation Goodwill 8,000,000 2,000,000 6,000,000 500,000 Total assets 8,250,000 Liabilities and Shareholders' Equity Current liabilities Preference share capital, 12% cumulative, P100 par Ordinary share capital, 50,000 shares, P100 par Share premium Retained earnings 2,000,000 1,500,000 5,000,000 750,000 ( 1,000,000) Total liabilities and shareholders' equity 8,250,000

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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