A company has an overdue 10% note payable to Filipino Bank amounting to P8,000,000 with accrued interest of P800,000 as of December 31, 2021. During the same date, the bank agreed to the following restructuring agreement: Reduce the principal obligation to P6,000,000. • Waive the P800,000 accrued interest. • Extend the maturity date to December 31, 2023. • Annual interest of 8% of the new principal is to be paid on December 31, 2022 and 2023. The prevailing market interest rate on December 31, 2021 is 10%. How much is the gain on debt restructuring? (Round off PV factor to four decimal places. Round off final answer to the nearest peso)
A company has an overdue 10% note payable to Filipino Bank amounting to P8,000,000 with accrued interest of P800,000 as of December 31, 2021. During the same date, the bank agreed to the following restructuring agreement: Reduce the principal obligation to P6,000,000. • Waive the P800,000 accrued interest. • Extend the maturity date to December 31, 2023. • Annual interest of 8% of the new principal is to be paid on December 31, 2022 and 2023. The prevailing market interest rate on December 31, 2021 is 10%. How much is the gain on debt restructuring? (Round off PV factor to four decimal places. Round off final answer to the nearest peso)
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 30E
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A company has an overdue 10% note payable to Filipino Bank amounting to P8,000,000 with accrued interest of P800,000 as of December 31, 2021. During the
same date, the bank agreed to the following restructuring agreement:
Reduce the principal obligation to P6,000,000.
• Waive the P800,000 accrued interest.
• Extend the maturity date to December 31, 2023.
• Annual interest of 8% of the new principal is to be paid on December 31, 2022 and 2023.
The prevailing market interest rate on December 31, 2021 is 10%. How much is the gain on debt restructuring?
(Round off PV factor to four decimal places. Round off final answer to the nearest peso)
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