How much is gain on extinguishment to be recognized

Reference no: EM132700031

Problem 1: Due to adverse economic circumstances and poor management. City High Company had negotiated a restructuring of its 9% 6,000,000 note payable to Two Bank due on January 1, 2018. There is no accrued interest on the note. The bank has reduced the principal obligation from 6,000,000 to 5,000,000 and extend the maturity to 3 years or on December 31, 2020. However the new interest rate is 13% payable annually every December 31. How much is gain on extinguishment to be recognized for 2006

Reference no: EM132700031

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