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Determine the gain or loss on extinguishment of debt

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Question - An entity has an outstanding bond payable amounting to P2, 500,000 with accrued interest of P250, 000. To settle this debt, the entity issued 1,000, P1, 000 par value shares, currently selling at P2, 250 per share. The bonds have a current fair value of P3, 150,000.

Required -

a) Determine the increase in the entity's stockholders' equity.

b) Determine the gain or (loss) on extinguishment of debt.

Reference no: EM132664661

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