Gliezel company has an overdue 8% note payable to City Bank at P4,000,000 and recorded accrued interest of P320,000. As a result of a settlement on January 1, 2018, City Bank agreed to the following restructuring arrangement: a. reduced the principal obligation to P3,500,000; b. forgave the P320,000 accrued interest; c. extended the maturity date to December 31, 2019 and d. annual interest of 10% is to be paid on December 31, 2018 and 2019. 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 amount of gain on extinguishment of debt to be recognized in 2018?
Gliezel company has an overdue 8% note payable to City Bank at P4,000,000 and recorded accrued interest of P320,000. As a result of a settlement on January 1, 2018, City Bank agreed to the following restructuring arrangement: a. reduced the principal obligation to P3,500,000; b. forgave the P320,000 accrued interest; c. extended the maturity date to December 31, 2019 and d. annual interest of 10% is to be paid on December 31, 2018 and 2019. 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 amount of gain on extinguishment of debt to be recognized in 2018?
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 28E: On January 1, 2019, Northfield Corporation becomes delinquent on a 100,000, 14% note to First...
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Gliezel company has an overdue 8% note payable to City Bank at P4,000,000 and recorded accrued interest of P320,000. As a result of a settlement on January 1, 2018, City Bank agreed to the following restructuring arrangement: a. reduced the principal obligation to P3,500,000; b. forgave the P320,000 accrued interest; c. extended the maturity date to December 31, 2019 and d. annual interest of 10% is to be paid on December 31, 2018 and 2019. The present value of 1 at 8% for two periods is 0.8573, and the present value of an ordinary
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