White Mocha Company has an overdue note payable to Australia Bank of P9,000,000 and recorded accrued interest of P 810,000. On December 31, 2022, Australia Bank agreed to the following restructuring agreement:Reduce the principal obligation by P1,000,000Waive the P 810,000 accrued interestExtend the maturity date to December 31, 2024Annual interest of 9% of the new principal is to be paid on December 31, 2023 and December 31, 2024The prevailing market interest rate for similar debt instrument on the date of restructuring is 10%.How much is the gain on debt restructuring?

Given data, Old liability: Principal=P9,000,000 Accrued Interest=P810,000 Interest Rate: 9% New…

Answered: How much is the gain on debt…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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White Mocha Company has an overdue note payable to Australia Bank of P9,000,000 and recorded accrued interest of P 810,000. On December 31, 2022, Australia Bank agreed to the following restructuring agreement:

Reduce the principal obligation by P1,000,000
Waive the P 810,000 accrued interest
Extend the maturity date to December 31, 2024
Annual interest of 9% of the new principal is to be paid on December 31, 2023 and December 31, 2024
The prevailing market interest rate for similar debt instrument on the date of restructuring is 10%.

How much is the gain on debt restructuring?

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