ABC Company after having experienced financial difficulties in 2020 negotiated with a major creditor and arrived at an agreement to restructure its notes payable on December 31, 2020. The creditor was owed principal of P3,600,000 and interest of P400,000 but agreed to accept an equipment worth P700,000 and notes receivable from an ABC Company's customer with carrying amount of P2,700,000. The equipment had original cost of P900,000 and accumulated depreciation of P300,000. How much should be recognized as gain from debt restructuring on December 31, 2020? Round answer to whole number.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
ABC Company after having experienced financial difficulties in 2020 negotiated with a major creditor and arrived at an agreement to restructure its notes payable on December 31, 2020. The creditor was owed principal of P3,600,000 and interest of P400,000 but agreed to accept an equipment worth P700,000 and notes receivable from an ABC Company's customer with carrying amount of P2,700,000. The equipment had original cost of P900,000 and
How much should be recognized as gain from debt restructuring on December 31, 2020?
Round answer to whole number.
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