Noor Company, an accrual basis taxpayer, had a $20,000 overdue account payable to a major supplier. The supplier agreed to settle the account for $15,000 cash from Noor. Which of the following statements is true?

Select one:

a. Noor recognizes no income because of the settlement.

b. Noor can deduct the $15,000 payment.

c. Noor recognizes $5,000 income because of the settlement.

d. Noor can deduct a $5,000 bad debt expense.