Bramble Company owes $236,000 plus $21,500 of accrued interest to Sunland State Bank. The debt is a 10-year, 10% note. During 2020, Bramble’s business deteriorated due to a faltering regional economy. On December 31, 2020, Sunland State Bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of $383,000, accumulated depreciation of $210,650, and a fair value of $215,000. Prepare journal entries for Bramble Company and Sunland State Bank to record this debt settlement. How should Bramble report the following in its 2020 income statement? Assume that, instead of transferring the machine, Bramble decides to grant 16,000 shares of its common stock ($10 par) which has a fair value of $215,000 in full settlement of the loan obligation. If Sunland State Bank treats Bramble’s stock as a trading investment, prepare the entries to record the transaction for both parties.
Bramble Company owes $236,000 plus $21,500 of accrued interest to Sunland State Bank. The debt is a 10-year, 10% note. During 2020, Bramble’s business deteriorated due to a faltering regional economy. On December 31, 2020, Sunland State Bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of $383,000,
Prepare
How should Bramble report the following in its 2020 income statement?
Assume that, instead of transferring the machine, Bramble decides to grant 16,000 shares of its common stock ($10 par) which has a fair value of $215,000 in full settlement of the loan obligation. If Sunland State Bank treats Bramble’s stock as a trading investment, prepare the entries to record the transaction for both parties.
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