On December 31, 2019, Kale Bank entered into a debt restructuring agreement with Miserable Corp., which was experiencing financial difficulties. A note for P1,000,000 and one year's accrued interest was due on this date from Miserable. The note receivable from Miserable was restructured as follows: reduced the principal obligation to P700,000. forgave the P120,000 of accrued interest for 2019. extended the maturity date to December 31, 2022. reduced the interest rate to 8%. Interest is payable annually on December 31, beginning 2020. How much interest income should Kale Bank report for the year ended December 31, 2020? Group of answer choices Nil P56,000 P64,258 P75,931
On December 31, 2019, Kale Bank entered into a debt restructuring agreement with Miserable Corp., which was experiencing financial difficulties. A note for P1,000,000 and one year's accrued interest was due on this date from Miserable. The note receivable from Miserable was restructured as follows: reduced the principal obligation to P700,000. forgave the P120,000 of accrued interest for 2019. extended the maturity date to December 31, 2022. reduced the interest rate to 8%. Interest is payable annually on December 31, beginning 2020. How much interest income should Kale Bank report for the year ended December 31, 2020? Group of answer choices Nil P56,000 P64,258 P75,931
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
On December 31, 2019, Kale Bank entered into a debt restructuring agreement with Miserable Corp., which was experiencing financial difficulties. A note for P1,000,000 and one year's accrued interest was due on this date from Miserable. The note receivable from Miserable was restructured as follows:
-
- reduced the principal obligation to P700,000.
- forgave the P120,000 of accrued interest for 2019.
- extended the maturity date to December 31, 2022.
- reduced the interest rate to 8%. Interest is payable annually on December 31, beginning 2020.
How much interest income should Kale Bank report for the year ended December 31, 2020?
Group of answer choices
Nil
P56,000
P64,258
P75,931
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