Determine the gain on debt restructuring

Assignment Help Accounting Basics
Reference no: EM133079545

Question - Macaso Company is experiencing financial difficulties and a downward trend in its operations. The firm is unable to service its debt and as a result, has missed payment of an annual interest on its loan from Bank of Manila. The principal amount of the loan is P2,000,000 (which is already due) with annual interest of 12% payable annually. Macaso management has negotiated a modification of its debt's terms with its creditors. The creditors agree to the following new terms (assume that at this time, the prevailing market rate of interest remained at 12%):

Forgive all accrued interest

Reduce the principal amount of the loan to P1,800,000

Extend the payment of principal for two years

Reduce the interest rate for the remaining two years to 8%

Required - Determine the Gain on debt restructuring?

a. P562,040

b. P440,000

c. P322,040

d. P0

Reference no: EM133079545

Questions Cloud

What amount should Diaz Company report as accrued interest : On September 1, 2020, Diaz Company borrowed on a P1,650,000 note payable from Malayan Bank. What amount should Diaz Company report as accrued interest
Pointsec mobile technology : Read the case study "Pointsec Mobile Technology" An introduction to the case under Appendix # 1 in this syllabus and paper that provides:
What is service company branding strategy : What is the service company's branding strategy? Some items you might want to consider in this section are: How do they position their brand?
Amount of shortage or surplus : What will happen if a price of P15 will be charged in the market instead? By how much is the amount of shortage or surplus? Show solutions.
Determine the gain on debt restructuring : The principal amount of the loan is P2,000,000 (which is already due) with annual interest of 12% payable annually. Determine the Gain on debt restructuring
Functions of marketing intermediaries : What are the various types and functions of marketing intermediaries? Which are more important for large businesses and why?
Basis of a 10-year amortization : Anewly??built business property, containing space for a store and two offices, can be purchased for P1.4M. A prospective buyer estimates that during the next 10
What is the equilibrium price : Assume that the demand curve D(p) given below is the market demand for widgets:
Calculate carl net income for tax purposes : Carl sold shares of a public corporation, purchased in 2020 for $13,200, for $22,000. Calculate Carl net income for tax purposes

Reviews

Write a Review

Accounting Basics Questions & Answers

  What are the accounting treatments for alpha acquisition

What are the accounting treatments for Alpha's acquisition of Beta on January 1, 2019? Please show all relevant journal entries for Alpha

  Promote greater comparability with companies

Why does the change "promote greater comparability with companies that have adopted International Financial Reporting Standards"?

  Recognized gain or loss and basis of new machine

The old machine has an adjusted basis of $36,000 and the new machine has a fair market value of $80,000. What is the recognized gain or loss and the basis of the new machine?

  What is the net cash provided by investing activities

Proceeds from long-term borrowings, Purchases of plant assets, Purchases of inventories, Proceeds from sale of common stock. What is the net cash provided by investing activities

  Provide an explanation between 200 and 300 words in length

label each exercise or problem clearly. use apa formatting and citation if needed.sand mell and rand are partners who

  Discuss the financial strengths and weaknesses of ktc

Compare and comment on the financial condition as evident from the ratio analysis and the cash flow statement.Discuss the financial strengths KTC

  The higgins company has just purchased a piece of equipment

the higgins company has just purchased a piece of equipment at a cost of 120000. this equipment will reduce operating

  Problem regarding the potential immigrants

Assume that each immigrant who is allowed into the country and has the disease costs the United States $100,000, and each immigrant who enters and does not have the disease will contribute $10,000 to the national economy. Assume that 10% of all po..

  Record the transactions on the books of lane company

Lane returns defective goods with a selling price of $840 and a scrap value of $430. Record the transactions on the books of Lane Company

  What is the cost of the ending work in process

What is the cost of the ending work in process of the department? What is the cost of the units transferred to the next department

  Calculate the number of units to be produced in june

Budgeted ending finished goods inventory for May is 3,150 units. Required - Calculate the number of units to be produced in June and July

  What is steel corporation basis in the equipment

Steel Corporation acquired its stock in 1995 paying $27,000 for it, What is Steel Corporation's basis in the Equipment it receives?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd