McCollum Corp. has a $10 million, 8% note outstanding to Ingram Bank. On December 31, 2022, the entire $10 million of principal, plus $800,000 of interest, is due. McCollum, facing severe financial hardship, seeks relief from Ingram.

Consider each of the following potential debt restructuring arrangements independently.

Ingram extends the due date for the principal for two years (from December 31, 2022 to December 31, 2024), defers the $800,000 interest currently due to that date, and charges no interest for the additional two years.

Ingram reduces the principal amount to $9 million dollars and extends the due date for two years (from December 31, 2022 to December 31, 2024). For the two additional years, interest will be charged at 6% (instead of 8%), but McCollum must still pay the $800,000 interest due on December 31, 2022.

Ingram extends the due date for the principal for six months (from December 31, 2022 to June 30, 2023). The $800,000 interest currently due is forgiven, but the six additional months accrue interest at 8%.

In which of these situations would McCollum recognize a gain?

Group of answer choices

C

All of these would result in a gain for McCollum.

A

B

A and B

None of these would result in a gain for McCollum.