During 2020, Mann Company experienced financial difficulties and is likely to default on a P5,000,000, 15% three-year note dated January 1,2018 payable to Summit Bank. On December 31,2020, the bank agreed to settle the note and unpaid interest of P750,000 for P4,100,000 cash payable on January 31,2021. 1. What amount should be reported as gain from extinguisment of debt in the 2020 income statement?
During 2020, Mann Company experienced financial difficulties and is likely to default on a P5,000,000, 15% three-year note dated January 1,2018 payable to Summit Bank. On December 31,2020, the bank agreed to settle the note and unpaid interest of P750,000 for P4,100,000 cash payable on January 31,2021. 1. What amount should be reported as gain from extinguisment of debt in the 2020 income statement?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Problem 9-15
During 2020, Mann Company experienced financial difficulties and is likely to default on a P5,000,000, 15% three-year note dated January 1,2018 payable to Summit Bank.
On December 31,2020, the bank agreed to settle the note and unpaid interest of P750,000 for P4,100,000 cash payable on January 31,2021.
1. What amount should be reported as gain from extinguisment of debt in the 2020 income statement?
A. 1,650,000
B. 900,000
C. 750,000
D. 0
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