To eliminated the deficit, ABC should reduce the ordinary share capital by
ABC Company has incurred losses continuously since its inception. At the recommendation of one its directors, the board of directors agreed to implement quasi-reorganization, through reduction of par value which was also agreed by its shareholders. Before effecting the quasi-reorganization, the following are the balances in the Shareholder's Equity:
Ordinary share capital, P 100 par P 25,000,000
Share Premium 10,000,000
Accumulated losses (15,000,000)
Also, part of the restatement of assets are reduction in the value of the building of P 500,000 and P 200,000 write down in the value of the inventory. The company also recognized unrecorded liabilities of P 300,000.
To eliminated the deficit, ABC should reduce the ordinary share capital by
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
