Granada Company has an overdue 8% note payable to First bank at P 8,000,000 and accrued interest of P 640,000. As a result of a restructuring agreement on January 1, 2011, First Bank agreed to the following provisions: The principal obligation is reduced to P 7,000,000. The accrued interest of P 640,000 is forgiven. The date of maturity is extended to December 31, 2014. Annual interest of 10% is to be paid for 4 years every December 31. What is the gain on extinguishment of debt to be recognized for 2011? a. P 1,000,000 b. P 1,178,000 c. P 1,640,000 d. P 538,000 What is the interest expense to be recognized for 2011? a. P 746,200 b. P 700,000 c. P 596,960 d. P 640,000