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. 

Required: 

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