Question
Due to adverse economic circumstances and poor management, Sultan Company has negotiated a restructuring of its P10,000,000 note payable to Kudarat Bank. Kudarat Bank has
Due to adverse economic circumstances and poor management, Sultan Company has negotiated a restructuring of its P10,000,000 note payable to Kudarat Bank. Kudarat Bank has agreed to reduce the face value of the note to P8,000,000 and extend the due date three years from the date of restructuring. However the interest rate was increased from 15% to 21%. The restructuring will occur on December 31, 2020. There is no unpaid interest on the restructured loan at this time. The tax rate is 30%. In accordance with PFRS 9, how much gain should be recognized on modification of terms? (Round off present value factors to four decimal places)
A P2,000,000 B P0 C P 904,224 DP632,957
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started