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What total amount should columbia recognize in profit

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Reference no: EM132577906

On December 31, 2015, Columbia Company shows the following data with respect to its matured obligation.

Notes Payable 5,000,000

Accrued Interest Payable 500,000

The company is threatened with a court suit if it could not pay its maturing debt. Accordingly the company enters into an agreement with the creditor for the transfer of a non-cash asset in full settlement of the mortgage. The agreement provides for the transfer of real estate carried in the books of Columbia at P3, 000,000. The real estate has a current fair market value of P4, 500, 000.

Question 1: What total amount should Columbia recognize in profit or loss for the year 2015 as a result of this transaction?

Option a. P 500,000

Option b. P 1,000,000

Option c. P 1,500,000

Option d. P 2,500,000

Reference no: EM132577906

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