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On December 31, 2025, American Bank enters into a debt restructuring agreement with Oriole Company, which is now experiencing financial trouble. The bank agrees to restructure a 12%, issued at par, $3,500,000 note receivable by the following modifications: 1. Reducing the principal obligation from $3,500,000 to $2,360,000. 2. Extending the maturity date from December 31, 2025, to January 1, 2029. 3. Reducing the interest rate from 12% to 10%. Oriole pays interest at the end of each year. On January 1, 2029, Oriole Company pays $2,360,000 in cash to American Bank. (a) Can Oriole Company record a gain under this term modification? Yes (b) If yes, compute the gain for Oriole Company. If no, enter amount as 0. Your answer is incorrect. The gain for Oriole Company $ eTextbook and Media List of Accounts Save for Later Prepare the journal entries to record the gain on Oriole's books. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List debit entry before credit entry.) Date Account Titles and Explanation December 31, 2025 eTextbook and Media List of Accountr Date Prepare the interest payment schedule of the note for Oriole Company after the debt restructuring. 12/31/25 $ 12/31/26 12/31/27 12/31/28 Total $ Cash Paid Attempts: 1 of 3 used Submit Answer $ ORIOLE COMPANY Interest Payment Schedule After Debt Restructuring Effective-Interest Rate Interest Expense Debit $ Reduction of Carrying Amount Credit $ Carry Value Not

On December 31, 2025, American Bank enters into a debt restructuring agreement with Oriole Company, which is now experiencing financial trouble. The bank agrees to restructure a 12%, issued at par, $3,500,000 note receivable by the following modifications: 1. Reducing the principal obligation from $3,500,000 to $2,360,000. 2. Extending the maturity date from December 31, 2025, to January 1, 2029. 3. Reducing the interest rate from 12% to 10%. Oriole pays interest at the end of each year. On January 1, 2029, Oriole Company pays $2,360,000 in cash to American Bank. (a) Can Oriole Company record a gain under this term modification? Yes (b) If yes, compute the gain for Oriole Company. If no, enter amount as 0. Your answer is incorrect. The gain for Oriole Company $ eTextbook and Media List of Accounts Save for Later Prepare the journal entries to record the gain on Oriole's books. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List debit entry before credit entry.) Date Account Titles and Explanation December 31, 2025 eTextbook and Media List of Accountr Date Prepare the interest payment schedule of the note for Oriole Company after the debt restructuring. 12/31/25 $ 12/31/26 12/31/27 12/31/28 Total $ Cash Paid Attempts: 1 of 3 used Submit Answer $ ORIOLE COMPANY Interest Payment Schedule After Debt Restructuring Effective-Interest Rate Interest Expense Debit $ Reduction of Carrying Amount Credit $ Carry Value Not

FINANCIAL ACCOUNTING
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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On December 31, 2025, American Bank enters into a debt restructuring agreement with Oriole Company, which is now experiencing financial trouble. The bank agrees to restructure a 12%, issued at par, $3,500,000 note receivable by the following modifications: 1. 2. 3. Oriole pays interest at the end of each year. On January 1, 2029, Oriole Company pays $2,360,000 in cash to American Bank. (a) Reducing the principal obligation from $3,500,000 to $2,360,000. Extending the maturity date from December 31, 2025, to January 1, 2029. Reducing the interest rate from 12% to 10%. Can Oriole Company record a gain under this term modification? (b) Yes If yes, compute the gain for Oriole Company. If no, enter amount as 0. Your answer is incorrect. The gain for Oriole Company $ eTextbook and Media List of Accounts Save for Later Prepare the journal entries to record the gain on Oriole's books. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List debit entry before credit entry.) Date December 31, 2025 eTextbook and Media List of Accounte Date Account Titles and Explanation Prepare the interest payment schedule of the note for Oriole Company after the debt restructuring. 12/31/25 $ 12/31/26 12/31/27 Total 12/31/28 $ Cash Paid Attempts: 1 of 3 used Submit Answer $ ORIOLE COMPANY Interest Payment Schedule After Debt Restructuring Effective-Interest Rate $ Debit Interest Expense Reduction of Carrying Amount Credit $ Carry Value Not
Transcribed Image Text:On December 31, 2025, American Bank enters into a debt restructuring agreement with Oriole Company, which is now experiencing financial trouble. The bank agrees to restructure a 12%, issued at par, $3,500,000 note receivable by the following modifications: 1. 2. 3. Oriole pays interest at the end of each year. On January 1, 2029, Oriole Company pays $2,360,000 in cash to American Bank. (a) Reducing the principal obligation from $3,500,000 to $2,360,000. Extending the maturity date from December 31, 2025, to January 1, 2029. Reducing the interest rate from 12% to 10%. Can Oriole Company record a gain under this term modification? (b) Yes If yes, compute the gain for Oriole Company. If no, enter amount as 0. Your answer is incorrect. The gain for Oriole Company $ eTextbook and Media List of Accounts Save for Later Prepare the journal entries to record the gain on Oriole's books. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List debit entry before credit entry.) Date December 31, 2025 eTextbook and Media List of Accounte Date Account Titles and Explanation Prepare the interest payment schedule of the note for Oriole Company after the debt restructuring. 12/31/25 $ 12/31/26 12/31/27 Total 12/31/28 $ Cash Paid Attempts: 1 of 3 used Submit Answer $ ORIOLE COMPANY Interest Payment Schedule After Debt Restructuring Effective-Interest Rate $ Debit Interest Expense Reduction of Carrying Amount Credit $ Carry Value Not
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