Bull Company is indebted to Apex Company under P 5,000,000, 12% 3-year period Dec. 31, 2018. Because of financial difficulties developing in 2020, Bull Company owned accrued interest of P 600,000 on the note on Dec. 31, 2020. Under a debt restructuring on Dec. 31, 2020, Apex Company agreed to settle the note and accrued interest for a tract of land having a fair value of P 4,500,000. The acquisition cost of the land is P 3,600,000. What amount of pretax gain on extinguishment should Bull Company report as component of income from continuing operations in 2020? a. P 2,000,000 b. P 1,400,000 c. P 1,100,000 d. P 900,000
Bull Company is indebted to Apex Company under P 5,000,000, 12% 3-year period Dec. 31, 2018. Because of financial difficulties developing in 2020, Bull Company owned accrued interest of P 600,000 on the note on Dec. 31, 2020. Under a debt restructuring on Dec. 31, 2020, Apex Company agreed to settle the note and accrued interest for a tract of land having a fair value of P 4,500,000. The acquisition cost of the land is P 3,600,000. What amount of pretax gain on extinguishment should Bull Company report as component of income from continuing operations in 2020? a. P 2,000,000 b. P 1,400,000 c. P 1,100,000 d. P 900,000
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 31E
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Bull Company is indebted to Apex Company under P 5,000,000, 12% 3-year period Dec. 31, 2018. Because of financial difficulties developing in 2020, Bull Company owned accrued interest of P 600,000 on the note on Dec. 31, 2020. Under a debt restructuring on Dec. 31, 2020, Apex Company agreed to settle the note and accrued interest for a tract of land having a fair value of P 4,500,000. The acquisition cost of the land is P 3,600,000. What amount of pretax gain on extinguishment should Bull Company report as component of income from continuing operations in 2020?
a. P 2,000,000
b. P 1,400,000
c. P 1,100,000
d. P 900,000
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