On December 31, 2020, St. Lawrence Inc. is in financial difficulty and cannot pay a 9%, $ 500,000, par value note, due immediately, to Lender Corp. Lender agrees to extend the maturity date to December 31, 2022, and reduce the interest payment rate to 5%, and the principal amount due to $470,000. Both companies have a year end of December 31. Both companies use IFRS.

Required:

1. Prepare the journal entries for both St. Lawrence and Lender to account for the event. Be sure to show calculations.
2. Assume the same information, except that the principal amount due does NOT change, and remains at $500,000. Prepare the journal entry for St. Lawrence only.