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Pluto Bhd incurred exceptional losses for several years in the past. A scheme of reconstruction involving creditors' voluntary liquidation was approved by all parties. Given
Pluto Bhd incurred exceptional losses for several years in the past. A scheme of reconstruction involving creditors' voluntary liquidation was approved by all parties. Given below is the statement of financial position of Pluto Bhd as at 1 January 2021. + #Statement of Financial Position as at 1 January 2021 RM'000 Property, plant and equipment Goodwille Inventories and work-in progress 100,000 Trade receivables 45,000 RM'000 295,000 30,000 cha dia 145,000 470,000 11.11. Share capital authorised, issued and fully paid Ordinary shares of 1 RM each 5% cumulative preference shares of RM1 each 300,000 100,000 400,000 (100,000) 300,000 100,000 Accumulated losses [ 9% debenture ce Current liabilities Trade payables 50,000 Bank overdraft 20,000 70,000 470,000 At the meeting of shareholders, the following scheme reconstruction was agreed upon: a) A new company named Electro Bhd was formed with authorised capital of 100,000,000 6% preference shares of RM1 each and 700,000,000 ordinary shares of RM1 each to acquire the assets and overdraft of Pluto Bhd as on 31 December 2021.- b) To issue two ordinary shares of RM1 each in Electro Bhd for every five ordinary shares in Pluto Bhd for the benefit of the ordinary shareholders. c) Electro Bhd to issue one 6% preference share in Electro Bhd for every one 5% preference shares in Pluto Bhd for the benefit of the preference shareholders of Pluto Bhd. d) Electro Bhd to issue sufficient 6% debentures in Electro Bhd to discharge the 9% debentures in Pluto Bhd at a premium of 10%. e) The creditors to accept cash of RM30,000,000 and RM20,000,000 in ordinary shares of Electro Bhd. f+The assets were value at RM'000 Property, plant and equipment 280,000 Inventories and work-in-progress 80,000 Trade receivable 40,000 g) Electro Bhd to issue for cash 100,000,000 ordinary shares of RM1 each at a premium of 10 sen each to the directors of Electro Bhd. h) Cost of the formation of Electro Bhd amounted to RM2,000,000. i) The bank overdraft was paid off. You are required to: i. Prepare the realisation and reconstruction account to close the books of Pluto Bhd. [11 marks] ii. Open the books of Electro Bhd by means of journal entries. [19 marks] iii. Prepare the statement of financial position of Electro Bhd after the acquisition of Pluto Bhd. [13 marks] iv. Discuss the rationale for undertaking an internal reconstruction rather than winding up. [12 marks
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