3) Leo Co. owes Stitch Co. $125,000 on a note payable, plus $12,500 accrued interest. Stitch agrees to accept a tract of land in full settlement of the debt whose fair market value was appraised at $75,000. Leo paid $80,000 for that land two years ago. Leo would record a gain (loss) on troubled-debt restructure in the year of the settlement in the amount of $_____________________ .

3a) Bric Co. restructures a note payable of $1,100,000 plus accrued interest of $78,073 with its bank on December 31, 2010. The bank (1) forgives the accrued interest and $100,000 of the principal, (2) extends the maturity date from December 31, 2010 to December 31, 2015, and (3) reduces the interest rate from 10% to 8%. Interest payments are to be made annually at year end. Bric Co.s interest expense for fiscal year-end 2011 would be $_____________________ and the book value of the restructured debt on 12/31/11 would be $_____________________ .