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Deficit Corporation has incurred losses from operations for many years. The board of directors applied for a quasi-reorganization in the SEC and eventually acquired an approval on August 31, 2020. Deficit’s balance sheet on this date is presented below (SEE PICTURE BELOW): As part of the quasi-reorganization process, PPE will be reduced by P1,750,000 while other assets be decreased by P750,000. Par value of the ordinary shares will be reduced by P5 per share. How much is the balance of shareholder’s equity after the quasi-reorganization?   a. P4,000,000 b. P8,000,000 c. P9,000,000 d. P5,000,000

Deficit Corporation has incurred losses from operations for many years. The board of directors applied for a quasi-reorganization in the SEC and eventually acquired an approval on August 31, 2020. Deficit’s balance sheet on this date is presented below (SEE PICTURE BELOW): As part of the quasi-reorganization process, PPE will be reduced by P1,750,000 while other assets be decreased by P750,000. Par value of the ordinary shares will be reduced by P5 per share. How much is the balance of shareholder’s equity after the quasi-reorganization?   a. P4,000,000 b. P8,000,000 c. P9,000,000 d. P5,000,000

FINANCIAL ACCOUNTING
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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Deficit Corporation has incurred losses from operations for many years. The board of directors applied for a quasi-reorganization in the SEC and eventually acquired an approval on August 31, 2020. Deficit’s balance sheet on this date is presented below (SEE PICTURE BELOW):

As part of the quasi-reorganization process, PPE will be reduced by P1,750,000 while other assets be decreased by P750,000. Par value of the ordinary shares will be reduced by P5 per share. How much is the balance of shareholder’s equity after the quasi-reorganization?
 
a. P4,000,000
b. P8,000,000
c. P9,000,000
d. P5,000,000
LIABILITIES & SHAREHOLDER’S EQUITY P 3,000,000 ASSETS P 2,750,000 | Total Liabilities 6,750,000 | Ordinary shares, par P10 1,000,000 | Share premium Retained Earnings P 10,500,000 Total Liab. & SHE Current Assets PPE 8,000,000 1,500,000 (2,000,000) P 10,500,000 Other Assets Total Assets
Transcribed Image Text:LIABILITIES & SHAREHOLDER’S EQUITY P 3,000,000 ASSETS P 2,750,000 | Total Liabilities 6,750,000 | Ordinary shares, par P10 1,000,000 | Share premium Retained Earnings P 10,500,000 Total Liab. & SHE Current Assets PPE 8,000,000 1,500,000 (2,000,000) P 10,500,000 Other Assets Total Assets
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