flows. On December 31, 2022, Queen Co. is in financial difficulty and cannot pay a note due that day. It is a $1,200,000 note with $120,000 accrued interest payable to Trear, Inc. Trear agrees to accept from Queen an equipment that has a fair value of $580,000, an original cost of $960,000, and accumulated depreciation of $460,000. Trear also forgives the accrued interest, extends the maturity date to December 31, 2025, reduces the face amount of the note to $500,000, and reduces the interest rate to 6%, with interest payable at the end of each year. Queen should recognize a gain or loss on the transfer of the equipment of a. $0. b. $80,000 gain. C. $120,000 gain. d. $380,000 loss.

On December 31, 2022, Queen Co, is in financial difficulty and cannot pay a note due that day. It is a $1,200,000 note with $120,000 accrued interest payable to Trear, Inc. Trear agrees to accept from Queen an equipment that has a fair value of $80,000, an original cost of $960,000, and accumulated depreciation of $460,000. Trear also forgives the accrued interest, extends the maturity date to December 31,2025 , reduces the face amount of the note to $500,000, and reduces the interest rate to 6%, with interest payable at the end of each year. Queen should recognize a gain or loss on the transfer of the equipment of a. 50 . b. $80,000 gain. c. $120,000 gain. d. $380,000 loss