20. Down Company has an overdue Notes Payable to City Bank of P8,000,000 and recorded accrued interest of P640,000, based on 8% interest rate. This rate of interest is presumed to be the market rate at the time of debt restructuring. As a result of a settlement on December 31, 2012, City Bank agreed to the restructuring arrangement as presented in the image. What is Down Company's gain on debt restructuring? Round off present value factors to four decimal places. * Reduced the principal obligation to P6,000,000. • Forgave the P640,000 accrued interest. • Extended the maturity date to December 31, 2014. • Annual interest of 10% is to be paid on December 31, 2013 and 2014. a. P2,640,000 b. P2,426,220 c. P1,440,000 O d. PO

20. Down Company has an overdue Notes Payable to City Bank of P8,000,000 and recorded accrued interest of P640,000, based on 8% interest rate. This rate of interest is presumed to be the market rate at the time of debt restructuring. As a result of a settlement on December 31, 2012, City Bank agreed to the restructuring arrangement as presented in the image. What is Down Company's gain on debt restructuring? Round off present value factors to four decimal places. * Reduced the principal obligation to P6,000,000. • Forgave the P640,000 accrued interest. • Extended the maturity date to December 31, 2014. • Annual interest of 10% is to be paid on December 31, 2013 and 2014. a. P2,640,000 b. P2,426,220 c. P1,440,000 O d. PO

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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