What is the entry to record the restructuring of the loan

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An entity has defaulted in its two annual interest payments on an existing loan payable. Because of the default, the lender agrees to the following restructuring of the loan on December 31 20x1.

a. the lender dorgoes the oayment of the accrued simple interest and any future interests.

b. the principal will be due in four equal annual payment of P 1 000 000 at each year end starting on December 31 20x1. Originally the P 4 000 000 principal amount is due in lump sum on decmber 31 20x1.

c. the nominal rate on the origibal loan is 10%. the current market rate on december 31 20x1 is 12%. Requirements

Problem a. what is the entry to record the restructuring of the loan payable.

Problem b. what is the interest expense.

Reference no: EM132700742

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