Question

Select all that apply the purposes of a quasi reorganization are to (select all that apply.) multiple select question.

a. acquire additional investment from stockholders.
b. file for bankruptcy. write down inflated assets.
c. reduce the deficit in retained earnings.

Answer 1

A quasi-reorganization aims to write down inflated assets and reduce the deficit in retained earnings to create a positive equity base, potentially making the company more attractive to investors. Option number b is correct.

Step-by-step explanation:

The purposes of a quasi-reorganization are typically to write down inflated assets to their fair market value, which can lead to a cleaner balance sheet and to reduce the deficit in retained earnings, thereby reestablishing a positive equity base for the company. This process does not necessarily mean a company is acquiring additional investment from stockholders or filing for bankruptcy.

Although not directly linked to obtaining more stockholder investment, the clean-up of a company's balance sheet can make the company more appealing to investors. Quasi-reorganization may occur alongside other strategic moves such as mergers, acquisitions, or restructuring.