Troubled-Debt Restructurings Settlement of Debt Transfer of Assets. E13.21 Strickland Company owes $200,000 plus $18,000 of accrued interest to Moran State Bank. The debt is a 10-year, 10% note. During 2025, Strickland's business deteriorated due to a faltering regional economy. On December 31, 2025, Moran State Bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of $390,000, accumulated depreciation of $221,000, and a fair value of $180,000. Solution: In Strickland Co.'s (Borrower) Books 53