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Compute what amount should be recognized as gain from debt

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Whale Company is experiencing financial difficulty and is negotiating debt restructuring with its creditor to relieve its financial stress. Whale has a $2,500,000 bank loan payable with BIP Bank. The bank accepted an equity interest in Whale Company in the form of 200,000 ordinary shares quoted at $12 per share. The par value is $10 per share. The fair value of the bank loan payable on the date of restructuring is $2,200,000.

Problem 1: What amount should be recognized as gain from debt extinguishment as a result of the equity swap?

Reference no: EM132675167

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