Sunset Company showed the following data with respect to a matured obligation: Mortgage payable 8,000,000 Accrued interest payable 600,000 The entity is threatened with a court suit if it could not pay its maturing debt. Accordingly, the entity entered into an agreement with the creditor for the issuance of share capital in full settlement of the mortgage. The agreement provided for the issue of 35,000 shares with par value of 100. The share is currently quoted at 130. The fair value of the liability is 4,500,000. Prepare the journal entry to record the equity swap on the books of Sunset Company.
22. Sunset Company showed the following data with respect to a matured obligation:
Mortgage payable 8,000,000
Accrued interest payable 600,000
The entity is threatened with a court suit if it could not pay its maturing debt. Accordingly, the entity entered into an agreement with the creditor for the issuance of share capital in full settlement of the mortgage.
The agreement provided for the issue of 35,000 shares with par value of 100. The share is currently quoted at 130. The fair value of the liability is 4,500,000. Prepare the
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