What is the gain or loss on debt extinguishment? Indicate gain or loss. F
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Joshua Company has outstanding a P8,000,000 note payable to an investment entity. Accrued interest payable on this note amounted to P800,000. Because of financial difficulties, Joshua Company negotiated with the investment entity to exchange inventory of machine parts to satisfy the debt. The inventory transferred is carried at P5,000,000. The estimated retail value of the inventory is P7,000,000. Joshua Company uses the perpetual inventory system. What is the gain or loss on debt extinguishment? Indicate gain or loss. Follow exact answer format: Example 1,500,000 GAIN or 1,500,000 LOSS 3,800,000 x[3,800,000 GAIN]
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