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16.4. On 1/1/A, DIT loans $100k at 10% interest to LAV. Interest is payable each 12/31, and the principal is due 12/31/D. LAV pays interest
16.4. On 1/1/A, DIT loans $100k at 10% interest to LAV. Interest is payable each 12/31, and the principal is due 12/31/D. LAV pays interest as scheduled on 12/31/A and B, but is unable to make the 12/31/C payment, and is in default. On 1/2/D LAV and DIT restructure their contract as follows. LAV gives DIT 1,000,000 shares in LAV's failing CPA-Review business (mkt. value/share: $0.01) as partial settlement of the indebtedness. They further agree that: principal is reduced to $80k, past-due interest is forgiven, and remaining payments are rescheduled for each 12/31 through 12/31/F and reduced to $8k each. Provide: a. Loss (BDE) recognized by DIT on restructuring. B. gain recognized by LAV. c. Economic gain realized by LAV. [chk: a., c.: $20k. b.: -0-]
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