Q3. ABC Inc., which owes Hook Co. SAR 900,000 in notes payable, is in financial difficulty. To eliminate the debt, Hook agrees to accept from ABC land having a fair value of SAR 610,000 and a recorded cost of SAR 450,000.

Instructions

(a) Compute the amount of gain or loss to ABC, Inc. on the transfer (disposition) of the land.

(b) Compute the amount of gain or loss to ABC, Inc. on the settlement of the debt.

(c) Prepare the journal entry on ABCs books to record the settlement of this debt.