Teal Mountain Inc. owes Headlands Bank $238,000 plus $15,200 of accrued interest. The debt is a 10-year. 10% note. During 2020. Teal Mountain's business declined due to a slowing regional economy. On December 31, 2020, the bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of $466,000, accumulated depreciation of $261,000, and a fair value of $218,000. The bank plans to dispose of the machine at a cost of $5,800. Both Teal Mountain and Headlands Bank prepare financial statements in accordance with IFRS 9. (a) Your answer is correct. Prepare the journal entries for Teal Mountain Inc. and Headlands Bank to record this debt settlement. Assume Headlands had previously recognized an allowance for doubtful accounts for the impairment prior to the settlement. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Teal Mountain Inc. Dec. 31, Notes Payable 238000 2020 Interest Payable 15200 Accumulated Depreciation Machinery i 261000 Machinery Gain on Disposal of Machinery Gain on Restructuring of Debt 466000 13000 35200 Machinery Gain on Disposal of Machinery Gain on Restructuring of Debt Headlands Bank ec. 31, 2020 Machinery Allowance for Doubtful Accounts Notes Receivable Interest Receivable 218000 35200 466000 13000 35200 238000 15200 Assume that, instead of transferring the machine, Teal Mountain decides to grant the bank 15.000 of its common shares, which have a fair value of $228,000. This is in full settlement of the loan obligation. Assuming that Headlands Bank treats Teal Mountain's shares as FV-NI investments, prepare the entries to record the transaction for both parties. Assume Headlands had previously recognized an allowance for doubtful accounts for the impairment prior to the settlement. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Dec. 31, Teal Mountain Inc. Debit Credit amounts Date Dec. 31, Account Titles and Explanation Teal Mountain Inc. 2020 Debit Credit c. 31, Headlands Bank 2020 extbook and Media