Baguio Company is experiencing financial difficulty and is renegotiating debt restructuring with the creditor to relieve its financiaal stress.The entity has P5,000,000 note payable to First Bank. The bank is considering two alternatives.Acceptance of land owned by the entity valued at P4,000,000 and carried at its historical cost of P2,800,000Acceptance of an equity interest in the entity in the form of 40,000 shares with fair value of P120 per share. The share capital has a par value of P100 per share.Required: Prepare journal entry that Baguio Company would make under each alternative.

Debt restructuring is a financial facility provided by lenders to the defaulting customers to repay…

Answered: debt restructuring

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

Related questions

Question

Baguio Company is experiencing financial difficulty and is renegotiating debt restructuring with the creditor to relieve its financiaal stress.

The entity has P5,000,000 note payable to First Bank. The bank is considering two alternatives.

Acceptance of land owned by the entity valued at P4,000,000 and carried at its historical cost of P2,800,000
Acceptance of an equity interest in the entity in the form of 40,000 shares with fair value of P120 per share. The share capital has a par value of P100 per share.

Required:

Prepare journal entry that Baguio Company would make under each alternative.

Expert Solution