Debit Credit RM'000 RM'000 Land 2,750 Building 1,680 Equipment 1,410 Manufacturing technology 1,000 Investment property 1,170 Inventories 3,000 Trade receivables 1,770 Retained earnings Cash and cash equivalent Ordinary share capital 8% debentures Trade creditors 1,220 2,000 5,000 2,000 5,500 Loan from directors 3,500 16,000 16,000 The following proposed reconstruction scheme has been duly passed and the approval from the court obtained. 1. The value of scrap metal of equipment is RM1,000,000 as the management believes that one of the existing pieces of equipment could not generate cash inflows and contribute to the production anymore. 2. 3. The building and investment property have been impaired by RM680,000 and RM170,000 respectively at the end of the year. The manufacturing technology is worthless due to its complete failure. 4. 5. 6. The inventory on 31 December 2021 included 5,000 goods that were partially damaged by flooding and need to be disposed of. The damaged inventory had cost RM8 each, with a selling price of RM3 each. RM70,000 of debts is now considered to be irrevocable due to one of the trade receivables which was in financial difficulties and has been outstanding for so long. A total of RM800,000 of the cash and cash equivalent, being receipts from the trade payables had been collected but the money had been embezzled by the finance manager. Required: a. Calculate the revised balance of retained earnings on 31 December 2021 after taking into account items 1 - 6 above. b. C. d. (9 marks) Calculate the reduction in the total ordinary share capital of MNG Bhd. when the scheme of capital reconstruction is implemented. (2 marks) Prepare the revised statement of the financial position as at 1 January 2022 immediately after the capital reconstruction scheme undertaken by MNG Bhd. (8 marks) Briefly explain the reasons why the shareholders agreed to the reduction in the nominal value of their shares