On December 31, 2019, GMC had a document payable with a value in the $ 100,000 books. GMC has faced economic difficulties that have not allowed to meet the payment of this debt. Suppose that on the date mentioned the The bank agreed to change the terms of the loan as follows: the principal (maturity value) was reduced to $ 80,000, the expiration date was changed to 31 December 2022, and the contractual interest rate was reduced from 15% to 10%. Determine the effect of this restructuring of debt on the Net Income of GMC on 12/31/19. to. GMC is going to report a profit of $ 20,000. b. GMC will report a profit equal to 5% of the principal. c. GMC is going to report a profit of $ 4,000. d. When the terms of the contract are adjusted, the debtor does NOT report earnings.

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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On December 31, 2019, GMC had a document payable with a value in the
$ 100,000 books. GMC has faced economic difficulties that have not
allowed to meet the payment of this debt. Suppose that on the date mentioned the
The bank agreed to change the terms of the loan as follows: the principal
(maturity value) was reduced to $ 80,000, the expiration date was changed to 31
December 2022, and the contractual interest rate was reduced from 15% to 10%. Determine the
effect of this restructuring of debt on the Net Income of
GMC on 12/31/19.
to. GMC is going to report a profit of $ 20,000.
b. GMC will report a profit equal to 5% of the principal.
c. GMC is going to report a profit of $ 4,000.
d. When the terms of the contract are adjusted, the debtor does NOT report earnings.
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