On December 31, 2020, ABC Company defaulted in the payment of the 10% interest on its loan from a bank of P1,000,000 because of financial difficulties. On the same date, ABC arranged a dacion en pago transaction with the bank in payment of its obligations. The bank agreed to accept the machinery of ABC Company acquired several years ago at P2,000,000 and will accumulated depreciation as of this date of P1,200,000. The fair value of this machinery on this date is P1,150,000. According to our standards, what amount of gain or loss from extinguishment of debt shall ABC Company recognize on this transaction?
On December 31, 2020, ABC Company defaulted in the payment of the 10% interest on its loan from a bank of P1,000,000 because of financial difficulties. On the same date, ABC arranged a dacion en pago transaction with the bank in payment of its obligations. The bank agreed to accept the machinery of ABC Company acquired several years ago at P2,000,000 and will accumulated depreciation as of this date of P1,200,000. The fair value of this machinery on this date is P1,150,000. According to our standards, what amount of gain or loss from extinguishment of debt shall ABC Company recognize on this transaction?
Chapter16: Accounting Periods And Methods
Section: Chapter Questions
Problem 15DQ
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On December 31, 2020, ABC Company defaulted in the payment of the 10% interest on its loan from a bank of P1,000,000 because of financial difficulties. On the same date, ABC arranged a dacion en pago transaction with the bank in payment of its obligations. The bank agreed to accept the machinery of ABC Company acquired several years ago at P2,000,000 and will
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