Question: Carrol Inc accomplished a quasi reorganization effective December 31 2014

Carrol, Inc., accomplished a quasi- reorganization effective December 31, 2014. Immediately before the quasi- reorganization, the stockholders’ equity was as follows:
Common Stock, Par Value $ 10 per Share
Authorized issued and outstanding 400,000 shares...... $ 4,000,000
Additional paid- in capital.............. 600,000
Retained earnings (deficit)............... (900,000)

Under the terms of the quasi- reorganization, the par value of the common stock was reduced from $ 10 per share to $ 5 per share, and equipment was written down by $ 1.2 million.

Discuss the accounting treatment necessary to accomplish this quasi- reorganization.

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  • CreatedDecember 17, 2014
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