What is the gain on extinguishment of debt

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Question - Due to extreme financial difficulties, Amado Company had negotiated a restructuring of a 10% P 5,000,000 note payable due on December 31, 2015. The unpaid interest on the note on such date is P 500,000. The creditor had agreed to reduce the face value to P 4,000,000, forgive the unpaid interest, reduce the interest rate to 8% and extend the due date three years from December 31, 2015.

1. What is the gain on extinguishment of debt in 2015?

2. What is the interest expense for 2016?

Reference no: EM132952910

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