12-19 Green Company has an overdue 8% note payable to City Bank at 9,600,000 and recorded accrued interest of 768,000. As a result of a settlement on January 1, 2017, City Bank agreed to the following restructuring arrangement: a. Reduced the principal obligation to 8,400,000. b. Forgave the 768,000 accrued interest. c. Extended the maturity date to December 31, 2018. d. Annual interest of 10% is to be paid on December 31, 2017 and 2018. The present value of 1 at 8% for two periods is 0.8573, and the present value of an ordinary annuity of 1 at 8% for two periods is 1.7833. What is the amount of gain on extinguishment of debt in 2017?
12-19 Green Company has an overdue 8% note payable to City Bank at 9,600,000 and recorded accrued interest of 768,000. As a result of a settlement on January 1, 2017, City Bank agreed to the following restructuring arrangement: a. Reduced the principal obligation to 8,400,000. b. Forgave the 768,000 accrued interest. c. Extended the maturity date to December 31, 2018. d. Annual interest of 10% is to be paid on December 31, 2017 and 2018. The present value of 1 at 8% for two periods is 0.8573, and the present value of an ordinary annuity of 1 at 8% for two periods is 1.7833. What is the amount of gain on extinguishment of debt in 2017?
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter9: Long-term Liabilities
Section: Chapter Questions
Problem 79E
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12-19
Green Company has an overdue 8% note payable to City Bank at 9,600,000 and recorded accrued interest of 768,000. As a result of a settlement on January 1, 2017, City Bank agreed to the following restructuring arrangement:
a. Reduced the principal obligation to 8,400,000.
b. Forgave the 768,000 accrued interest.
c. Extended the maturity date to December 31, 2018.
d. Annual interest of 10% is to be paid on December 31, 2017 and 2018.
The present value of 1 at 8% for two periods is 0.8573, and the present value of an ordinary
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