What is the gain on extinguishment of debt to be recognized

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Question - Due to extreme financial difficulties, Bonnie Company has negotiated a restructuring of its 10%, P5,000,000 note payable due on December 31, 2020. The unpaid interest on the note on such date is P500,000. The creditor has agreed to reduce the face value to P4,000,000, forgive the unpaid interest, reduce the interest rate to 8% and extend the due date three years from December 31, 2020. (PVF 2 decimal points)

-What is the gain on extinguishment of debt to be recognized by Cali Swag Company on December 31, 2020?

-What is the interest expense to be recognized by Cali Swag for the year 2021?

Reference no: EM132947925

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