During 2021 Nice Company experienced financial difficulties and is likely to default on a P500,000, 15%, three-year note dated January 1, 20X2, payable to Forest National Bank. On December 31, 2021, the bank agreed to settle the note and unpaid interest of P75,000 for 2021 for P50,000 cash and marketable securities having a carrying amount of P375,000. Nice's acquisition cost of the securities is P385,000. What amount should Nice report as a gain from the debt restructuring in its 2021 income statement?

During 2021 Nice Company experienced financial difficulties and is likely to default on a P500,000, 15%, three-year note dated January 1, 20X2, payable to Forest National Bank. On December 31, 2021, the bank agreed to settle the note and unpaid interest of P75,000 for 2021 for P50,000 cash and marketable securities having a carrying amount of P375,000. Nice's acquisition cost of the securities is P385,000. What amount should Nice report as a gain from the debt restructuring in its 2021 income statement?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 3MC: On July 1, 2019, Aldrich Company purchased as an available-for-sale security 200,000 face value, 9%...

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