P18-1 [Balance sheet for fresh-start reporting evaluation] Tessa Ltd, which operated under Chapter 11 of the bankruptcy act, released its balance sheet when they submited their reorganization plan as follows (in thousands): Cash and equivalents Accounts receivable Inventories Land Buildings - net Equipment - net Total assets August 1, 2014 $ 275 200 250 300 350 300 $1,675 Liabilities subject to compromise Accounts payable Wages payable Bond payable Interest payable Total liabilities $1,500 200 100 400 100 $2,300 Common stock Deficit Total equity $ 900 (1,525) $ 1.675 Tessa's reorganization plan is as follows: 1. Bond holders agree to accept $200,000 of new common stock, $150,000 of senior debt of 12% bonds, and $50,000 cash payable at December 31, 2014. 2. Priority tax claims of $100,000 will be paid after reorganization plan is confirmed. 3. Accounts payable will be settled using $200,000 of new common stock and $300,000 of subordinate debts. 4. Current accrued interest payable on bonds is forgiven. 5. Equity holders will exchange their stock with $250,000 of new common stock. REQUIRED: Show calculations and determine whether Tessa is confirmed for a fresh-start reporting. P18-1 [Balance sheet for fresh-start reporting evaluation] Tessa Ltd, which operated under Chapter 11 of the bankruptcy act, released its balance sheet when they submited their reorganization plan as follows (in thousands): Cash and equivalents Accounts receivable Inventories Land Buildings - net Equipment - net Total assets August 1, 2014 $ 275 200 250 300 350 300 $1,675 Liabilities subject to compromise Accounts payable Wages payable Bond payable Interest payable Total liabilities $1,500 200 100 400 100 $2,300 Common stock Deficit Total equity $ 900 (1,525) $ 1.675 Tessa's reorganization plan is as follows: 1. Bond holders agree to accept $200,000 of new common stock, $150,000 of senior debt of 12% bonds, and $50,000 cash payable at December 31, 2014. 2. Priority tax claims of $100,000 will be paid after reorganization plan is confirmed. 3. Accounts payable will be settled using $200,000 of new common stock and $300,000 of subordinate debts. 4. Current accrued interest payable on bonds is forgiven. 5. Equity holders will exchange their stock with $250,000 of new common stock. REQUIRED: Show calculations and determine whether Tessa is confirmed for a fresh-start reporting