How much is the gain on debt restructuring?
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- White Mocha Company has an overdue note payable to Australia Bank of P9,000,000 and recorded accrued interest of P 810,000. On December 31, 2022, Australia Bank agreed to the following restructuring agreement: Reduce the principal obligation by P1,000,000 Waive the P 810,000 accrued interest Extend the maturity date to December 31, 2024 Annual interest of 9% of the new principal is to be paid on December 31, 2023 and December 31, 2024 The prevailing market interest rate for similar debt instrument on the date of restructuring is 10%. How much is the gain on debt restructuring?A company has an overdue 10% note payable to Filipino Bank amounting to P8,000,000 with accrued interest of P800,000 as of December 31, 2021. During the same date, the bank agreed to the following restructuring agreement: Reduce the principal obligation to P6,000,000. • Waive the P800,000 accrued interest. • Extend the maturity date to December 31, 2023. • Annual interest of 8% of the new principal is to be paid on December 31, 2022 and 2023. The prevailing market interest rate on December 31, 2021 is 10%. How much is the gain on debt restructuring? (Round off PV factor to four decimal places. Round off final answer to the nearest peso)Kuko company has an overdue 10% note payable to Filipino Bank amounting to P8,000,000 with accrued interest of P800,000 as of December 31, 2021. During the same date, the bank agreed to the following restructuring agreement: Reduce the principal obligation to P6,000,000. Waive the P800,000 accrued interest. Extend the maturity date to December 31, 2023. Annual interest of 8% of the new principal is to be paid on December 31, 2022 and 2023. The prevailing market interest rate on December 31, 2021 is 10%. How much is the gain on debt restructuring? (Round off PV factor to four decimal places. Round off final answer to the nearest peso)
- On January 1, 2018, Granada Company has an overdue 8% note payable to First Bank at P8,000,000 and accrued interest of P640,000. As a result of a restructuring agreement on January 1, 2018, First Bank agreed to the following provisions: • The principal obligation is reduced to P7,000,000. • The accrued interest of P640,000 is forgiven. • The date of maturity is extended to December 31, 2021. • Annual interest of 10% is to be paid for 4 years every December 31. The present value of 1 at 8% for 4 periods is 0.735 and the present value of an ordinary annuity of 1 at 8% for 4 periods is 3.31.What is the gain on extinguishment of debt to be recognized for 2018?Fiber Company has a note payable to Philippine National Bank of P8,000,000. The note bears interest of 12%. As a result of a settlement on December 31, 2020, Philippine National Bank agreed to the following restructuring arrangement: • Extended the maturity date to December 31, 2022. • Annual interest of 10% is to be paid on December 31, 2021 and 2022 Note: Round off present value into four decimal places. How much is the gain or loss on extinguishment of debt to be recorded in the statement of comprehensive income? 344 16COn January 1, 2020, Granada Company had an overdue 10% note payable to First Bank at P8,000,000 and accrued interest of P800,000. As a result of a restructuring agreement on January 1, 2020, First Bank agreed to the fołlowing provisions: . The principal obligation is reduced to P6,000,000. . The accrued interest of P800,000 is forgiven. • The date of maturity is extended to December 31, 2023. . Annual interest of 12% is to be paid for 4 years every December 31. The present value of 1 at 10% for 4 periods is 0.683 and the present value of an ordinary annuity of 1 at 10% for 4 periods is 3.17. 1. What is the present value of the new note payable on January 1, 2020? a. 6,380,400 b. 6,000,000 . c. 4,098,000 d. 5,464,000 2. What is the gain on extinguishment of debt to be recognized for 2020? a. 2,000,000 b. 2,800,000 c. 2,419,600 d. 1,619,600 3. What is the interest expense to be recognized for 2020? a. 720,000 b. 800,000 c. 600,000 d. 638,040
- 2. On January 1, 2018, Hipolito Company has an overdue 8% note payable to First Bank at P8,000,000 and accrued interest of P640,000. As a result of a restructuring agreement on January 1, 2018, First Bank agreed to the following provisions: The principal obligation is reduced to P7,000,000. The accrued interest of P640,000 is forgiven. The date of maturity is extended to December 31, 2021. Annual interest of 10% is to be paid for 4 years every December 31. The present value of 1 at 8% for 4 periods is 0.735 and the present value of an ordinary annuity of 1 at 8% for 4 periods is 3.31. What is the gain on extinguishment of debt to be recognized for 2018?45. A company has an overdue 10% note payable to Filipino Bank amounting to P8,000,000 with accrued interest of P800,000 as of December 31, 2021. During the same date, the bank agreed to the following restructuring agreement: Reduce the principal obligation to P6,000,000. Waive the P800,000 accrued interest. Extend the maturity date to December 31, 2023. Annual interest of 8% of the new principal is to be paid on December 31, 2022 and 2023. The prevailing market interest rate on December 31, 2021 is 10%. How much is the gain on debt restructuring?On 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)
- Good Company has an overdue 8% notes payable to Better Company amounting to P8million and accrued interest for one year of P640,000. as a result of restructuring agreement on January 1, 2021, both parties agreed to the following provisions:* the principal obligation is reduced to P7,000,000* the accrued interest is forgiven* the date of maturity is extended to December 31, 2024* annual interest of 10% is to be paid in 4 years every December 31The prevailing rate of interest remained at 8%. The PV of 1 at 8% for 4 periods is 0.735 and the PV of an ordinary annuity of 1 at 8% for 4 periods is 3.31. How much is the gain on debt restructuring? a. P1,640,000 b. P1,178,000 c. P1,000,000 d. P538,000On 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) a. P1,076,800 b. P1,623,000 c. P1,576,800 d. P1,123,2003. Gliezel company has an overdue 8% note payable to City Bank at P4,000,000 and recorded accrued interest of P320,000. As a result of a settlement on January 1, 2018, City Bank agreed to the following restructuring arrangement: a. reduced the principal obligation to P3,500,000; b. forgave the P320,000 accrued interest; c. extended the maturity date to December 31, 2019 and d. annual interest of 10% is to be paid on December 31, 2018 and 2019. The present value of 1 at 8% for two periods is 0.8573, and the present value of an ordinary annuity of 1 at 8% for two periods is 1.7833. What amount of gain on extinguishment of debt to be recognized in 2018?
