Various assets	$2,000,000	Prepetition liabilities, fully secured	$400,000
		Prepetition liabilities subject to compromise	1,360,000
		Postpetition liabilities	820,000
		Common stock	200,000
		Retained deficit	(780,000)
TOTAL	$2,000,000	TOTAL	$2,000,000

Mannheim Corporation is ready to emerge from Chapter 11 bankruptcy under a reorganization plan accepted by all parties. Mannheim's balance sheet shows:

There are no excess assets. The present value of future cash flows from the reorganized company's operating assets is $1,900,000. The creditors represented by the prepetition liabilities subject to compromise agree to take $580,000 in 7 percent notes payable plus 70 percent of the common stock as settlement. The old shareholders will have 30 percent of the common stock.

The gain on discharge of debt is

Select one:

a. $1,110,000

b. $710,000

c. $780,000

d. $430,000