Sisy Company
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2.) Sisy Company has an outstanding 950,000 note payable to Bro Finance Corporation. Because of financial difficulties, Sisy negotiates with Bro to exchange inventory of machine parts to satisfy the debt. The cost of the machine parts inventory transferred is carried at sisy's books at P 610,000. The estimated sales price of these inventory items is p 835,000.
REQUIRED:
a.) How much shall be recognize as gain on debt restructuring?
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- Southwestern Wear Inc. has the following balance sheet: The trustees costs total 281,250, and the firm has no accrued taxes or wages. The debentures are subordinated only to the notes payable. If the firm goes bankrupt and liquidates, how much will each class of investors receive if a total of 2.5 million is received from sale of the assets?Halo-halo Company has outstanding P950,000 note payable to Ube Finance Corporation. Because of financial difficulties, Halo-halo Company negotiates with Ube Finance to exchange inventory of machine parts to satisfy the debt. The cost of the machine parts inventory transferred is carried in Halo-halo Company’s books at P835,000. The estimated sales price of these inventory items is P610,000. The gain on debt restructuring is A. 0 B. 115,000 C. 225,000 D. 340,000(Based on Appendix 14B) Pratt Industries owes First National Bank $5 million but, due to financial difficulties,is unable to comply with the original terms of the loan. The bank agrees to settle the debt in exchange for landhaving a fair value of $3 million. The book value of the property on Pratt’s books is $2 million. For the reportingperiod in which the debt is settled, what amount(s) will Pratt report on its income statement in connection withthe troubled debt restructuring?
- Chico Company entered into a troubled debt restructuring agreement with Social Bank. The bank agreed to accept the land with a carrying amount of P800,000 and a fair value of P1,000,000 in exchange for a note payable with a carrying amount of P1,500,000. What is the gain on extinguishment of debt?Pratt Industries owes First National Bank $5 million but, due to financial difficulties, is unable to comply with the original terms of the loan. The bank agrees to settle the debt in exchange for land having a fair value of $3 million. The book value of the property on Pratt’s books is $2 million. For the reporting period in which the debt is settled, what amount(s) will Pratt report on its income statement in connection with the troubled debt restructuring?Seal Company is experiencing financial difficulty and is negotiating debt restructuring with its creditor to relieve its financial stress. Seal has a P2,500,000 note payable to United Bank. The bank accepted an equity interest in Seal Company in the form of 200,000 ordinary shares quoted at P12 per share. The par value is P10 per share. The fair value of the note payable on the date of restructuring is P2,200,000. What amount should be recognized as gain from debt extinguishment as a result of the "equity swap”? a. 400,000 b. 100,000 c. 500,000 d. 200,000
- Before any debt cancellation, the insolvent KuhnCo holds business equipment, its only asset, with a fair market value of $1 million and related liabilities of $1.25 million. The lender agrees to cancel $400,000 of the liabilities. KuhnCo has no other liabilities. a. How much gross income does KuhnCo report as a result of the debt cancellation? b. How would your answer change, if at all, had the lender cancelled $200,000 of the debt?Thaler Inc. holds a $1 million receivable ($800,000 principal, $200,000 accrued interest) from Einhorn Industries, and agrees to settle the receivable outright for $900,000 given Einhorn’s difficult financial situation. How much gain or loss should Thaler recognize on this troubled debt restructuring?The Statement of Affairs for Ivan Corporation shows that approximately P0.78 on the peso probably will be paid to unsecured creditors without priority. The corporation owes JICR Company P23,000 on a promissory note, plus accrued interest on P940. Inventories with a current fair value of P19,200 collateralized the note payable. Compute the amount that JICR Company should receive from Ivan Corporation assuming that the actual payments to unsecured creditors without priority consist of 78% of total claims.
- Joshua Company has outstanding a P8,000,000 note payable to an investment entity. Accrued interest payable on this note amounted to P800,000. Because of financial difficulties, Joshua Company negotiated with the investment entity to exchange inventory of machine parts to satisfy the debt. The inventory transferred is carried at P5,000,000. The estimated retail value of the inventory is P7,000,000. Joshua Company uses the perpetual inventory system. What is the gain or loss on debt extinguishment? Indicate gain or loss. Follow exact answer format: Example 1,500,000 GAIN or 1,500,000 LOSS 3,800,000 x[3,800,000 GAIN]The statement of affairs of Darrell Putix Co. indicates that unsecured creditors without priority with total claims of ₱720,000 may expect to recover only ₱288,000 after all the assets were sold. Among the creditors of Darrell Putix Co. are the following: Government - taxes payable of ₱400,000, inclusive of ₱80,000 assessents and surcharges. XYZ bank - loan payable of ₱4,000,000 and accrued interest of ₱200,000, backed by collateral security with realizable value of ₱4,800,000. Alpha Financing Co. - loan payable of ₱3,200,000 backed by collateral security with realizable value of ₱2,000,000. Mr. Bombay - loan payable of ₱1,000,000 and accrued interest of ₱200,000. No collateral security. How much is the expected recovery of partially secured creditors? a. 1,280,000 b. 2,480,000 c. 2,160,000 d. 0Karim Inc., which owes Habib Co. SAR 900,000 in notes payable, is in financial difficulty. To eliminate the debt, Habib agrees to accept from Karim land having a fair value of SAR 610,000 and a recorded cost of SAR 450,000. a) Compute the amount of gain or loss to Karim, Inc. on the transfer (disposition) of the land. b) Compute the amount of gain or loss to Karim, Inc. on the settlement of the debt. c) Prepare the journal entry on Karim's books to record the settlement of this debt
