What is the shareholders equity after quasi-reorganization

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Reference no: EM132771046

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

Inventory with cost of P6,500,000 was recorded at the market value of 6,000,000.
Property, plant and equipment were recorded at P12,000,000, net of accumulated depreciation. The sound value was P8,000,000.
The share capital is P7,000,000 consisting of 700,000 shares with par value of P10, the share premium is P1,600,000, and the deficit in retained earnings is P900,000.
The par value of share is to be reduced from P10 to P5.

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

Option 1: 3,700,000
Option 2: 3,500,000
Option 3: 3,300,000
Option 4: 4,200,000

Reference no: EM132771046

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