meet the scheduled December 31, 2017 payment of principal and interest because of financial difficulties. On September 30, 2017, Freez
At December 31, 2016, Frost Company had outstanding P3,000,000, 12% note payable to Freeze Bank dated January 1, 2012. The note was due on December 31, 2017 which interest every December 31. During 2017, Frost notified Freeze Bank that it might be unable to meet the scheduled December 31, 2017 payment of principal and interest because of financial difficulties. On September 30, 2017, Freeze Bank sold the note for P2,800,000 to Frozen Company, one of Frost Company's oldest and largest customers, On December 31, 2017, Frozen Company agreed to accept inventory costing P2,600,000 worth P3,150,000 from Frost Company in full settlement of the note.
The gain/loss reported in Frost Company's profit or loss as a result of the liability derecognition is
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