Answered: How much is the gain on debt…

Business

Accounting

How much is the gain on debt restructuring?

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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Question

Good Company has an overdue notes payable of P1,500,000 to Better Company. Accrued interest on the notes amounts to P150,000. Good entered into an agreement with Better Company to exchange equity securities in settlement for the debt. Good Company is issuing 20,000 shares of its P50 par value ordinary shares. The ordinary shares is currently selling at P65. How much is the gain on debt restructuring?

a.) P0

b.) P250,000

c.) P350,000

d.) P650,000

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