2. Utok Company owes P2,000,000 plus P180,000 of accrued interest to Alambre State Bank. The debt is a 10-year, 10% note. During 2016, Utok's business deteriorated due to a faltering regional economy. On December 31, 2016, Alambre State Bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of P3,900,000, accumulated depreciation of P2,210,000 and fair value of P1,900,000, How much should Utok Company report in its profit or loss as a result of the financial liability's derecognition?

2. Utok Company owes P2,000,000 plus P180,000 of accrued interest to Alambre State Bank. The debt is a 10-year, 10% note. During 2016, Utok's business deteriorated due to a faltering regional economy. On December 31, 2016, Alambre State Bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of P3,900,000, accumulated depreciation of P2,210,000 and fair value of P1,900,000, How much should Utok Company report in its profit or loss as a result of the financial liability's derecognition?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

2. Utok Company owes P2,000,000 plus P180,000 of accrued interest to Alambre State
Bank. The debt is a 10-year, 10% note. During 2016, Utok's business deteriorated due
to a faltering regional economy. On December 31, 2016, Alambre State Bank agrees
to accept an old machine and cancel the entire debt. The machine has a cost of
P3,900,000, accumulated depreciation of P2,210,000 and fair value of P1,900,000, How
much should Utok Company report in its profit or loss as a result of the financial
liability's derecognition?

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