Quasi-Reorganization.

A quasi-reorganization is a voluntary corporate readjustment, initiated by management, and carried out with due formality, including stockholder approval, in which the assets of a corporation are restated as they properly would be in the accounts of a new corporation, if one were created to acquire the assets and assume the liabilities of the existing corporation. The depression and inflation periods have radically changed asset values both upward and downward to the point that the financial statements prepared from such data are misleading and insignificant. This violates a basic purpose of accounting- that financial statements should reflect the responsibility of management towards the assets entrusted to it, and to provide a basis for reporting on the manner in which management discharges that responsibility? The real picture must be presented to discharge this purpose, and to accomplish this, significant data must be used. Under these conditions the corporation needs a "fresh start" and needs to adjust accounts accordingly without going through a lengthy and costly legal reorganization.