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Unformatted text preview: will consist of the following steps: 1. The balance in the retained earnings (deficit) account is brought up to the date of the reorganization. In addition to closing any open income statement accounts, any asset write-downs related to circumstances that existed prior to the reorganization must be accounted for. 2. The updated deficit is reclassified to share capital, contributed surplus, or a separately identified account in shareholders' equity, giving retained earnings a zero balance. 3. The assets and liabilities are comprehensively revalued. New values are determined in negotiations among equity and non-equity interests. The difference between the old and new carrying values is accounted for as a revaluation adjustment and any costs directly incurred to carry out the reorganization are then recorded as share capital, contributed surplus, or a separately identified account within shareholders' equity....
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This note was uploaded on 03/28/2012 for the course ACCTG ACC423 taught by Professor Smith during the Spring '10 term at University of Phoenix.
- Spring '10