On December 31, 2021, ABC Co. was indebted to XYZ Street Company on a P2M, 10% note.Only interest had been paid to date. Due to its financial difficulties ABC has negotiated arestructuring of its notes payable. The parties agree that ABC would settle the debt on thefollowing terms:• Settle one half of the note by transferring land with a recorded value of P800,000, and a fairvalue of P900,000.• Settle one fourth of the note by transferring 200,000 shares of P1 par ordinary shares with afair value of P1.80 per share.• Modify the terms of the remaining one fourth of the note by reducing the interest to 5%,extend the due date three years from the date of restructuring and reducing the principal toP300,000.Total gains on the settlement of debt to be recognized in profit or loss: *

On 31.12.2010, 10% Notes payable = P2000000 Interest rate = 10% Interest amount per annum = P2000000…

Only interest had been paid to date. Due to its financial d restructuring of its notes payable. The parties agree that A following terms: • Settle one half of the note by transferring land with a re value of P900,000. • Settle one fourth of the note by transferring 200,000 sha fair value of P1.80 per share. • Modify the terms of the remaining one fourth of the not extend the due date three years from the date of restructu P300.000.

Only interest had been paid to date. Due to its financial d restructuring of its notes payable. The parties agree that A following terms: • Settle one half of the note by transferring land with a re value of P900,000. • Settle one fourth of the note by transferring 200,000 sha fair value of P1.80 per share. • Modify the terms of the remaining one fourth of the not extend the due date three years from the date of restructu P300.000.

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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