Katrina & Co. has encountered financial difficulties and has become unable to retire its P1,500,000 bonds payable, as well as its accrued interest of P150,000. To renegotiate the liability, Katrina agreed with the creditor to settle the debt through exchange of equity securities. Katrina’s ordinary shares have a par value of P50 and are currently selling at P65. How much will Katrina record as gain on debt restructuring upon settlement of the bonds?

Katrina & Co. has encountered financial difficulties and has become unable to retire its P1,500,000 bonds payable, as well as its accrued interest of P150,000. To renegotiate the liability, Katrina agreed with the creditor to settle the debt through exchange of equity securities. Katrina’s ordinary shares have a par value of P50 and are currently selling at P65. How much will Katrina record as gain on debt restructuring upon settlement of the bonds?

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter7: Corporations: Reorganizations

Section: Chapter Questions

Problem 40P

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