Journey Company entered into agreement with its creditor to exchange its equity instrument and land in place of the financial liability with principal of P5,000,000 and accrued interest of P400,000. The terms of the exchange were 300,000 ordinary shares with P5 par value and P10 fair value. The land transfer has book value of P1,000,000 and fair value of P1,500,000. How much is the gain (or loss) from the extinguishment of the financial liability?
Journey Company entered into agreement with its creditor to exchange its equity instrument and land in place of the financial liability with principal of P5,000,000 and accrued interest of P400,000. The terms of the exchange were 300,000 ordinary shares with P5 par value and P10 fair value. The land transfer has book value of P1,000,000 and fair value of P1,500,000. How much is the gain (or loss) from the extinguishment of the financial liability?
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter7: Property Transactions: Basis, Gain And Loss, And Nontaxable Exchanges
Section: Chapter Questions
Problem 32P
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Journey Company entered into agreement with its creditor to exchange its equity instrument and land in place of the financial liability with principal of P5,000,000 and accrued interest of P400,000. The terms of the exchange were 300,000 ordinary shares with P5 par value and P10 fair value. The land transfer has book value of P1,000,000 and fair value of P1,500,000.
How much is the gain (or loss) from the extinguishment of the financial liability?
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