Question 1

Statement of Financial Position of Rino as at 31 December 20X6
	000s
Non-Current Assets
Goodwill	187
Patents	170
Development costs	259
Land and buildings	2870
Plant and machinery	1715
Motor vehicles	329
Investments	150
	5680
Current assets
Trade receivables	465
Inventory	380
	845
Total Assets	6525
Equity and liabilities
Ordinary shares at 1 each	6000
Share premium	145
6% Cumulative preference shares at 1 each	1200
Retained earnings reserve	-2250
	5095
Long term liabilities
5% Debentures	1000
Current liabilities
Bank overdraft	165
Trade payables	265
	430
Total equity and liabilities	6525

The following reconstruction scheme has been proposed by the directors:

1. The ordinary shares to be reduced to 60% per share from par value and the preference shares reduced to 40% each from par value. Both classes of shares will subsequently be combined and converted into ordinary shares of 1 per value, the balance on the share premium account to be written off.
2. Assets are revalued as follows:

I)Plant & machinery 165,000

II)Motor vehicles 278,000

3. Trade payables agree to receive 100,000 cash and any remaining balances will be settled by receiving 2 ordinary shares for every 3 owed.
4. The debenture holders takeover a piece of land (cost 180,000) at an agreed value of 245,000 in part settlement of the principal outstanding and any remaining balance will be settled by issuing two ordinary shares of 1 each for every 5 of debentures outstanding.
5. Investments to be sold at a value of 285 000.
6. The accumulated losses and goodwill will be written off.
7. Cost of reconstruction will amount to 2000.
8. Balance of reorganisation account will be adjusted with plants

Required

Process the transactions required by the scheme and prepare a revised Statement of financial position after completion of the scheme.