On December 31, 2008, Nolte Co. is in financial difficulty and cannot pay a note due that day. It is a $600,000 note with $60,000 accrued interest payable to Piper, Inc. Piper agrees to accept from Nolte equipment that has a fair value of $290,000, an original cost of $480,000, and accumulated depreciation of $230,000. Piper also forgives the accrued interest, extends the maturity date to December 31, 2011, reduces the face amount of the note to $250,000, and reduces the interest rate to 6%, with interest payable at the end of each year.

*103. Nolte should recognize a gain or loss on the transfer of the equipment of

a. $0.

b. $40,000 gain.

c. $60,000 gain.

d. $190,000 loss.

*104. Nolte should recognize a gain on the partial settlement and restructure of the debt of

a. $0. b. $15,000.

c. $55,000.

d. $75,000.

*105. Nolte should record interest expense for 2011 of

a. $0.

b. $15,000.

c. $30,000.

d. $45,000.