Accounting for a troubled debt restructuring.

Ludwig, Inc., which owes ciffin Co$.$ $$4,000,000$ in notes payable, is in financial difficulty. To eliminate the debt, cifin agrees to accept from Ludwig land having a fair value of $$3,050,000$ and arecorded cost of $$2,250,000.$

Instructions

$($a$)$ Compute the amount of gain or loss to Ludwig, Inc. on the transfer $($disposition$)$ of the land.

$($B$)$ Compute the amount of gain or loss to Ludwig, Inc. on the restructuring of the debt.

$($c$)$ Prepare the joumal entry on Ludwig's books to record the restructuring of this debt.

$($d$)$ Compute the gain or loss to Ciffin Co$.$ from restructuring of its recelvable from Ludwig.

$($e$)$ Prepare the joumal entry on Ciffin's books to record the restructuring of this receivable.