On December 31, 2025, American Bank enters into a debt restructuring agreement with Coronado Company, which is now experiencing financial trouble. The bank agrees to restructure a 12%, issued at par, $3,600,000 note receivable by the following modifications: 1. Reducing the principal obligation from $3,600,000 to $2,430,000. Extending the maturity date from December 31, 2025, to January 1, 2029. Reducing the interest rate from 12% to 10%. 2. 3. Coronado pays interest at the end of each year. On January 1, 2029, Coronado Company pays $2,430,000 in cash to American Bank. (a) Can Coronado Company record a gain under this term modification? Your answer is partially correct. Yes (b) If yes, compute the gain for Coronado Company. If no, enter amount as 0. The gain for Coronado Company $ eTextbook and Media List of Accounts Save for Later Attempts: 1 of 3 used Submit Answer Prepare the journal entries to record the gain on Coronado's books. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List debit entry before credit entry.)
On December 31, 2025, American Bank enters into a debt restructuring agreement with Coronado Company, which is now experiencing financial trouble. The bank agrees to restructure a 12%, issued at par, $3,600,000 note receivable by the following modifications: 1. Reducing the principal obligation from $3,600,000 to $2,430,000. Extending the maturity date from December 31, 2025, to January 1, 2029. Reducing the interest rate from 12% to 10%. 2. 3. Coronado pays interest at the end of each year. On January 1, 2029, Coronado Company pays $2,430,000 in cash to American Bank. (a) Can Coronado Company record a gain under this term modification? Your answer is partially correct. Yes (b) If yes, compute the gain for Coronado Company. If no, enter amount as 0. The gain for Coronado Company $ eTextbook and Media List of Accounts Save for Later Attempts: 1 of 3 used Submit Answer Prepare the journal entries to record the gain on Coronado's books. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List debit entry before credit entry.)
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 30E
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