Lake Company, a major creditor of financially troubled Spain Company, has agreed to modify the terms of a debt owed to Lake Company. The debt consists of a $810,000, 11% note that is due currently along with accrued interest of $110,000. The terms of modification of the debt are

1.		Accrued interest of $110,000 is to be canceled.
2.		The face value of the note is reduced to $660,000, payable at the end of three years. Interest on the new face value at 7% is to be paid annually.

(a)

Should a gain on restructuring be recognized?

YesNo

(If no gain is to be recognized, please enter 0. Do not leave any fields blank.)

Amount of gain to be recognized

$