How much is the gain or loss from extinguishment of debt

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Question - Slate Black Corporation is having financial difficulty and therefore has asked Stout National Bank to restructure its P5,000,000 note outstanding. Slate Black also has an unpaid interest amounting to P500,000. The present note has 3 years remaining and pays a current rate of interest of 10%. The present market rate for a loan of this nature is 12%. The note was issued at its face value.

Stout National Bank agrees to accept land in exchange for relinquishing its claim on this note. The land has a book value of P4,450,000 and a fair value of P5,175,000.

How much is the gain or loss from extinguishment of debt under IFRS?

Reference no: EM132989148

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