It is our conclusion that the quasi reorganization concept has little theoretical validity, and we urge the Financial Accounting Standards Board to delete it from GAAP.
43 reinforced an earlier rule permitting an accounting procedure known as a corporate readjustment--or more commonly, a quasi reorganization.
See exhibit 1, page 80, for a review of selected quasi reorganization literature.
On the other, the DM says some observers question whether a quasi reorganization is good accounting and whether it should result in a new basis of accounting.
Instead, section 210 of the Securities and Exchange Commission Codification of Financial Reporting Policies requires that, at a minimum, these four conditions exist before a quasi reorganization can be considered effective.
Similarly, financial reporting varies depending on whether a debt restructuring occurs within the context of a quasi reorganization, a troubled debt restructuring or as part of a bankruptcy settlement.
The first alternative available to a company experiencing continued book losses resulting in a retained earnings deficit is to reorganize on its own - a quasi reorganization.
There are a number of benefits to a quasi reorganization.
Assuming the company does not elect quasi reorganization, a restructuring of debt by a financially distressed company falls under Financial Accounting Standards Board Statement no.