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Find what amount should columbia recognize profit

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Reference no: EM132577927

On December 31, 2016 Columbia Company shows the following data with respect to its matured obligation

Notes Payable                        P 5,000,000
Accrued Interest Payable         P 500,000

The company is threatened with a court suit if it could not pay its maturing debt. Accordingly, the company enters into an agreement
with the creditor for the transfer of a non-cash asset in full settlement of the mortgage. The agreement provides for the transfer of realstate carried in the books of Columbia at P3,000,000. The real state has a current market value of P4,500,000.

Question 1: What amount should Columbia recognize profit or loss for the year 2016 as a result of this transaction?

A. 500,000
B. 1,000,000
C. 1,500,000
D. 2,500,000

Reference no: EM132577927

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