P16-25 Quasi-Reorganization (Appendix) The Moore Corporation experienced several years of operating losses and encountered serious financial difficulties, resulting in liquidity problems and a deficit in retained earnings. However, recent entry into several new markets has been encouraging. The board of directors, with its stock- holders' consent, decides to complete a quasi-reorganization on December 31, 2004. The balance sheet, prior to any adjustments, is shown below: Cash Accounts receivable Inventories Investments in M Company bonds Property and equipment Less: Accumulated depreciation Patents (net) Total Assets $ 6,000 18,000 42,000 66,000 193,000 (71,000) Retained earnings 29,000 $283,000 Total Liabilities and Stockholders' Equity $283,000 4. The appraisal value of the property and equipment is $100,000. 5. Several obsolete patents are being carried on the books at a carrying value of $8,000. Accounts payable Accrued liabilities On December 31, 2004, an examination of the company accounts discloses the