On December 31, 2014, Green Bank enters into a debt restructuring agreement with Troubled Inc., which is now experiencing financial trouble. The bank agrees to restructure a $1.70- million, 11% note receivable issued at par by the following modifications:

1.

Reducing the principal obligation from $1.70 million to $1.36 million

2.

Extending the maturity date from December 31, 2014, to December 31, 2017

3.

Reducing the interest rate from 11% to 10%

Troubled pays interest at the end of each year. On January 1, 2018, Troubled Inc. pays $1.36 million in cash to Green Bank for the principal. The market rate is currently 10%. (Use the below table)

(a)Can Troubled record a gain under this term modification?

(b) Prepare the journal entry to record the gain on Troubled's books.