A Company with a Substantial Deficit Undertakes a Quasi-Reorganization

question 50

Multiple Choice

A company with a substantial deficit undertakes a quasi-reorganization. Certain assets will be written down to their present fair market value. Liabilities will remain the same. How would the entries to record the quasi-reorganization affect each of the following? Contributed Capital Retained Earnings

• A) Increase Decrease
• B) Decrease No effect
• C) Decrease Increase
• D) No effect Increase

---

Definitions:

Trade Barriers

Measures imposed by governments to regulate or limit international trade, including tariffs, quotas, and import restrictions, to protect domestic industries.

Restrictions On Imports

Regulatory measures imposed by a government to control the volume or type of goods that can be brought into a country from abroad, often to protect domestic industries.

Patented Intellectual Property

Intellectual property such as inventions or processes protected by a patent, granting the patent holder exclusive rights to use and benefit from that property.

Trademarked Brand

A trademarked brand is a brand that has been legally registered or established by use as representing a company or product.