What is the gain on extinguishment for 2020? *
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Due to extreme financial difficulties, Armand Company had negotiated a restructuring of a 10% P 5,000,000 note payable due on Dec. 31, 2020. There is no accrued interest on the note. The creditor agreed to reduce the face amount to P 4,000,000, forgive the unpaid interest, reduce the interest rate to 8% and extend the due date three years from Dec. 31, 2020. The present value of 1 at 10% for 3-periods is 0.75 and the present value of an ordinary annuity of 1 at 10% for 3-periods is 2.49. What is the gain on extinguishment for 2020? *
a. P 1,703,200
b. P 1,203,200
c. P 2,000,000
d. P 540,000
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- Due to extreme financial difficulties, Armand Company had negotiated a restructuring of a 10% P 5,000,000 note payable due on Dec. 31, 2020. There is no accrued interest on the note. The creditor agreed to reduce the face amount to P 4,000,000, forgive the unpaid interest, reduce the interest rate to 8% and extend the due date three years from Dec. 31, 2020. The present value of 1 at 10% for 3-periods is 0.75 and the present value of an ordinary annuity of 1 at 10% for 3-periods is 2.49. What is the interest expense for 2022? a. P 320,000b. P 379,680c. P 385,648d. P 373,548Due to extreme financial difficulties, Armada Company has negotiated a restructuring of its 10% P5,000,000 note payable due on December 31, 2021. 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, 2021. Armada Company should report gain on extinguishment of debt in its 2021 income statement at Group of answer choices 1,203,200 1,703,200 540,000 2,000000Due to extreme financial difficulties, Armada Company has negotiated a restructuring of its 10% P5,000,000 note payable due on December 31, 2021. 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, 2021. 1. What is the interest expense for 2022? 2. What amount should Armada Company report as gain (loss) on extinguishment of debt in 2021?
- Due to extreme financial difficulties, Armand Company had negotiated a restructuring of a 10% P 5,000,000 note payable due on Dec. 31, 2020. The unpaid interest on such date was P 500,000. The creditor agreed to reduce the face amount to P 4,000,000, forgive the unpaid interest, reduce the interest rate to 8% and extend the due date three years from Dec. 31, 2020. The present value of 1 at 10% for 3-periods is 0.75 and the present value of an ordinary annuity of 1 at 10% for 3-periods is 2.49. REQUIRED What is the gain on extinguishment for 2020? What is the interest expense for 2021?ABC Company, due to extreme financial difficulties has negotiated a restructuring of its 10%, P10,000,000 note payable due on December 31, 2021. The unpaid interest on the note on such date is P1,000,000. The creditor has agreed to reduce the face value to P8,000,000, forgive the unpaid interest, reduce interest rate to 8% and extend the due date three years from December 31, 2021. The present value of 1 at 10% for three periods is 0.75 and present value of an ordinary annuity of 1 at 10% for three periods is 2.49. What is the interest expense to be recognized by ABC Company for the year 2022?Due to extreme financial difficulties, Aries Company negotiated a restructuring of a 10%,P5,000,000 note payable due on December 31, 2024. The unpaid interest on the note on suchdate is P500,000. The creditor agreed to reduce the face value to P4,000,000, forgive theunpaid interest, reduce the interest rate to 8% and extend the due date three years fromDecember 31, 2024. The present value of 1 at 10% for three periods is 0.75 and the presentvalue of an ordinary annuity of 1 at 10% for three periods is 2.49. 1. What is the discount or premium on the new note payable? 2. What is the interest expense to be recognized in 2025? 3. What is the gain on extinguishment of debt to be recognized for 2024?
- ABC Company, due to extreme financial difficulties has negotiated a restructuring of its 10%, P10,000,000 note payable due on December 31, 2021. The unpaid interest on the note on such date is P1,000,000. The creditor has agreed to reduce the face value to P8,000,000, forgive the unpaid interest, reduce interest rate to 8% and extend the due date three years from December 31, 2021. The present value of 1 at 10% for three periods is 0.75 and present value of an ordinary annuity of 1 at 10% for three periods is 2.49. What is the gain on extinguishment of debt to be recognized by ABC Company on December 21, 2021?At January 1, 2018, Brainard Industries, Inc., owed Second BancCorp $12 million under a 10% note due December 31, 2020. Interest was paid last on December 31, 2016. Brainard was experiencing severe financial difficultiesand asked Second BancCorp to modify the terms of the debt agreement. After negotiation Second BancCorpagreed to:a. Forgive the interest accrued for the year just ended.b. Reduce the remaining two years’ interest payments to $1 million each and delay the first payment untilDecember 31, 2019.c. Reduce the unpaid principal amount to $11 million.Required:Prepare the journal entries by Brainard Industries, Inc., necessitated by the restructuring of the debt at (1) January1, 2018; (2) December 31, 2019; and (3) December 31, 2020.Due to adverse economic circumstances and poor management, Tagaytay Highlands Company had negotiated a restructuring of the 9% P6,000,000 note payable to Second Bank due on January 1, 2021. There is no accrued interest on the note. The bank has reduced the principal obligation from P6,000,000 to P5,000,000 and extend the maturity to 3 years on December 31, 2023. However, the new interest rate is 13% payable annually every December 31. The present value of 1 at 9% for three periods is .77 and the present value of an ordinary annuity of 1 at 9% for three periods is 2.53. What is the present value of the new liability? What is the gain on modification of debt for 2021? What is the interest expense for 2021?
- At January 1, 2016, Brainard Industries, Inc., owed Second BancCorp $12 million under a 10% note due December 31, 2018. Interest was paid last on December 31, 2014. Brainard was experiencing severe financial difficulties and asked Second BancCorp to modify the terms of the debt agreement. After negotiation Second BancCorp agreed to: a. Forgive the interest accrued for the year just ended. b. Reduce the remaining two years’ interest payments to $1 million each and delay the first payment until December 31, 2017. c. Reduce the unpaid principal amount to $11 million. Required: Prepare the journal entries by Brainard Industries, Inc., necessitated by the restructuring of the debt at (1) January 1, 2016; (2) December 31, 2017; and (3) December 31, 2018.On January 1, 2020 , the lending company made a 200,000 8% loan . The interest is receivable at the end of each year , with the principal amount to be received at the end of 5 years . As of December 31, 2020 the interest for the current year has not been recer nor recorded because the borrower is experiencing financial difficulties . The lending company negotiated a restructuring of the loa The payment of all of the interest based on the original will be delayed until the end the 5 year loan term In addition , the amount of principal repayment will be dropped from P 200,000 to P 100,000 The prevailing interest rate for similar type of the loan as of December 312020 is 10 %The loan impairment loss to be recognize in 2020 profit or loss is Select the correct response 77,492 P 67,700 73,506On December 31, 2020, the Reliable Finance Company had P5,000,000 notes receivable from Burgundy Company. The note bears 10% interest. The books reported accrued interest of P500,000 in this date. Because of financial distress being suffered by Burgundy, Reliable Finance agreed to the restructuring and modification of terms of its loan to Burgundy as follows: • Reduction of principal to P4,000,000; • Reduction of interest to 8% payable annually beginning December 31, 2021; • Accrued interest on December 31, 2020 is condoned; and • Principal payment was reset to December 31, 2022. How much is the impairment loss on December 31, 2020 as a result of restructuring? (Use two-decimal places for the PV factor)