QUESTIONS a) Ofosu Led (Ofosu) is a company located in the Savannah Region. The company was strategically located to produce cashew nuts and to take advantage of available tax incentives. However, the company has incurred trading losses for many years now. The Directors are considering the alternatives of liquidation and capital reduction. The company's Statement of Financial Position as at 31 December 2020 is as follows: Non-current assets GH"million Property, plant and equipment 3,250 Patent 350 3.600 Current assets Inventories 1.000 Accounts receivables 500 1.500 Total assets 5,100 Equity & Liabilities Ordinary share capital (@GH1) Retained earnings 2,000 (750) 20% Preference shares 1.250 1.100 Non-Current liabilities 25% Debentures (unsecured) 1.000 Current liabilities Accounts payables Bank overdraft (secured on property, plant & equipment) 1,000 750 Total Equity & Liabilities 1.750 5,100 450 - per . . . You are provided with the following additional information In the event of a forced cafe, theatre would probably alte the following amounts. Glennilion Property. Plant and Equipment 1.500 Inventories 400 Accounts receivable e company is developing a new product, which is expected to generate profit before interest and tax or GH 500 million per muh in anticipation of an immediate capital injection of million The Ordinary share capital should be written down to 200 million shares of GH1.00 each. In , agreed to capital The 20% preference shures are to be converted into 500 million ordinary shares valued at GH1 He is proposed for GH650 million of the 25% Debentures to be converted into ordinary shares ar GHe I per share and the remainder to be converted into GH350 million 20% Debentures. in payment of the remaining balance. New supplies would be paid for on delivery Accounts payables to accept immediate payment of 50% and a moratorium of six (6 months A two-for-one rights issue will be made at a price of GHl per share for cash after the above million and Accounts Receivables at GH 450 million. Property, plant and equipment are to be revalued at GH2,250 million, inventories at GH800 The accumulated losses and intangible assets are to be written off. The corporate tax rate is 25%. Liquidation expenses will amount to GH10 million. Required: i) Prepare a Statement of Financial Position after reconstruction on the assumption that the capita injection took place. 1) Describe the steps the Directors of Ofosu Ltd should follow to appraise the proposed schem (15 marks) of reconstruction with an emphasis on the interest of shareholders