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On December 31, 2018, Waterway Industries is in financial difficulty and cannot pay a note due that day. It is a $3100000 note with
On December 31, 2018, Waterway Industries is in financial difficulty and cannot pay a note due that day. It is a $3100000 note with $310000 accrued interest payable to Carla Vista, Inc. Carla Vista agrees to accept from Waterway equipment that has a fair value of $1460000, an original cost of $2410000, and accumulated depreciation of $1160000. Carla Vista also forgives the accrued interest. extends the maturity date to December 31, 2021. reduces the face amount of the note to $1250000, and reduces the interest rate to 5%, with interest payable at the end of each year. Waterway should record interest expense for 2021 of O $125000. $0. $187500. $62500.
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