Reference no: EM132744536

Gaston Company has sustained heavy losses over a period of time and conditions warrant that the entity should undergo a quasi-reorganization at year end.

a. Inventory with cost of Php 6,500,000 was recorded at the market value of Php 6,000,000
b. Property, plant, and equipment were recorded at Php 12,000,000, net of accumulated depreciation.
The sound value was Php 8,000,000
c. The share capital is Php 7,000,000 consisting of Php 700,000 shares with par value of Php 10, the
share premiums Php 1,600,000, and the deficit in retained earnings is Php 900,000
d. The par value of the share is to be reduced from Php 10 t Php 5

Required:

Problem 1: Immediately after the quasi-reorganization, what is the shareholders' equity?