Crane Corp. currently has an issued debenture outstanding with Abbra Bank. The note has a principal of $4 million, was issued at face value, and interest is payable at 7%. The term of the debenture was 10 years and was issued on December 31, 2013. The current market rate for this debenture is 9%. Crane Corp. has been experiencing financial difficulties and has asked Abbra Bank to restructure the note. Both Crane and Abbra Bank prepare financial statements in accordance with IFRS. It is currently December 31, 2020.

For each of the following independent situations related to the above scenario, prepare the journal entries that Crane Corp. and Abbra Bank would make for the restructuring that is described.

c) Abbra Bank agrees to modify the note by allowing Crane not to pay the interest on the note for the remaining period. Assume that the bank had not previously recognized any loss on impairment.