1 of 4 QUESTION 1 CAPITAL RECONSTRUCTION SCHEME Kele Ltd is a private company. Three quarters of the stated capital is held by the directors or members of their families. The company's draft Statement of Financial Position as at the end of 2017 was as follows: Statement of Financial Position at 31 December 2017 Non-Current assets Intangible assets: Development costs GH Gle Goodwill Tangible assets: Land and buildings Current Assets Plant and machinery 85,000 60,000 270,000 326,000 Inventories Receivables Total Assets 426,000 531,000 1698,000 Equity and liabilities Stated capital (800,000 share of GHel each) 800,000 Capital Surplus 50,000 Retained loss (232,000) Current liabilities Payables 393,000 Bank loans and overdraft 687.000 Total Equity plus Liability 1,698,000 Additional information 1. Bank loans and overdrafts consist of a 10% loan of GHc400,000 repayable in 2018 and an unsecured overdraft of GH287,000. 2. The demand for the company's products fell drastically in recent years owing to the import of high quality and cheaper products from Togo. The development costs appearing in the Statement of financial Position above relate to a new product which has been perfected to a marketable stage, and for which there is believed to be a strong demand. The costs have been properly capitalized in accordance with the provisions of relevant accounting standards (IAS 38). The company is in urgent need of capital to meet existing liabilities and the necessary new investment in plant and working capital.