Question 2

The balance sheet of Nisha Ltd as at 31st March 2017

LIABILITIES	AMOUNT(N$)	ASSETS	AMOUNT(N$)
-Equity share of N$10 each F.P -12% preference share of N$100 each F.p -10%Debenture -Outstanding interest on debenture -Bank Overdraft -Sundry creditor	1,200,000 1,200,000 800,000 80,000 60000 300,000 3,640,000	Goodwill Land and Building Plant and Machinery Furniture Patent and patterns Stock Debtors Cash and Bank Profit and loss account	200,000 1,200,000 1,000,000 300,000 150,000 100,000 130,000 60,000 500,000 3,640,000

Scheme of Reconstructions

a) The 12% preference share are to be converted into the same number of 15% preference share of N$75 each full paid

b) The equity share are to be converted into same number of equity shares of N$5 each full paid

c) Debenture holder agree to fore go interest outstanding subject to the condition that the rate of interest be incurred to 15%

d) Creditors agree to fore go 25% their claim

e) Land and Buildings is valued at N$1,500,000

f) The amount that made available is utilized to write off all intangible and fictitious assets and to bring down the value of plant and machinery by 40%