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Find the amount of gain to be recognized

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Reference no: EM132948131

Problem - Moon Company is experiencing financial difficulty and is negotiating a debt restructuring with its creditor. Moon Company has an outstanding financial liability of P2,500,000. Stars Financing Company accepted an equity interest in Moon Company in the form of 400,000, P5 par value ordinary shares which at the time of restructuring was quoted at P6.00 per share. The fair value of the obligation at the time of the restructuring was P2,450,000. Find the amount of gain to be recognized arising from the debt restructuring by way of an "equity swap"?

Reference no: EM132948131

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