Quasi Reorganization Problem

Problem 18-13 Quasi reorganization (based on Appendix 18) A new CEO was hired to revive the floundering Champion Chemical Corporation. The company had endured operating losses for several years, but confidence was emerging that better times were ahead. The board of directors and shareholders approved a quasi reorganization for the corporation. The reorganization included devaluing inventory for obsolescence by $110 million and increasing land by $5 million. Immediately prior to the restatement, at December 31, 2016, Champion Chemical Corporation's balance sheet appeared as follows (in condensed form): CHAMPION CHEMICAL CORPORATION Balance Sheet At December 31, 2016 (S in millions) Cash Receivables Inventory Land Buildings and equipment (net) S 27 50 250 52 98 $ 477 Liabilities Common stock (372 million shares at $1 par) Additional paid-in capital Retained eamings (deficit) $ 279 372 50 (224) 477