BU397 Chapter Notes - Chapter A/B: Valuation Of Options, Retained Earnings
Document Summary
Appendix 15b: financial reorganization (aspe, not covered in ifrs) Financial reorganization is a procedure that enables a company proceed with its plans without the encumbrance of having to recover from a deficit. Involves realigning equity and non-equity interests such that holders of one or more of the significant classes of non-equity interests and the holders of all significant classes give up some or all of their rights and claims. Comprehensive revaluation (new party controls company, costs are reasonably determinable: deficit is brought to zero reclassified to share capital, cont sur, or other equity acct. Asset writedowns or impairments (that existed before reorg) should be recorded first: change in debt and equity that have been negotiated are recorded, assets and liabilities are comprehensively revalued. Revaluation adjustments are closed to share capital, cont sur, or other equity acct. Note: new costs must not be greater than the entity"s fair value, if this is known.
