On December 31, 2019, Guimary Corporation is experiencing extreme financial pressure and is in default in meeting interest payment on its long-term note of P6,000,000 due on December 31, 2019. The interest rate is 10% payable every December 31. In an agreement with the creditor, Guimary Corporation obtained the following changes in the terms of the note: The accrued interest of P600,000 on December 31, 2019 is forgiven. The principal is reduced by P1,000,000. The new interest rate is 12%. The new date of maturity is December 31, 2024. At the time of restructuring, the market rate of interest was 10%. What is Guimary Corporation's gain on debt restructuring? P1,979,180 P1,600,000 P1,221,020 a. b. C. PO

On December 31, 2019, Guimary Corporation is experiencing extreme financial pressure and is in default in meeting interest payment on its long-term note of P6,000,000 due on December 31, 2019. The interest rate is 10% payable every December 31. In an agreement with the creditor, Guimary Corporation obtained the following changes in the terms of the note: The accrued interest of P600,000 on December 31, 2019 is forgiven. The principal is reduced by P1,000,000. The new interest rate is 12%. The new date of maturity is December 31, 2024. At the time of restructuring, the market rate of interest was 10%. What is Guimary Corporation's gain on debt restructuring? P1,979,180 P1,600,000 P1,221,020 a. b. C. PO

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

On December 31, 2019, Guimary Corporation is experiencing
extreme financial pressure and is in default in meeting interest
payment on its long-term note of P6,000,000 due on December 31,
2019. The interest rate is 10% payable every December 31.
In an agreement with the creditor, Guimary Corporation obtained
the following changes in the terms of the note:
The accrued interest of P600,000 on December 31, 2019 is
forgiven.
The principal is reduced by P1,000,000.
The new interest rate is 12%.
The new date of maturity is December 31, 2024.
At the time of restructuring, the market rate of interest was 10%.
What is Guimary Corporation's gain on debt restructuring?
P1,979,180
P1,600,000
P1,221,020
a.
b.
c.
d.
PO

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