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Debt Restructuring

This document contains 18 problems showing calculations for gains and losses on debt extinguishment and modifications. Each problem contains the fair value and carrying amount of the new liability, the carrying amount of the extinguished or modified liability, and the resulting gain or loss. It also includes calculations of interest expense on the new liabilities.

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Stanley Aquino
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62 views3 pages

Debt Restructuring

This document contains 18 problems showing calculations for gains and losses on debt extinguishment and modifications. Each problem contains the fair value and carrying amount of the new liability, the carrying amount of the extinguished or modified liability, and the resulting gain or loss. It also includes calculations of interest expense on the new liabilities.

Uploaded by

Stanley Aquino
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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PROBLEM 9-13

Carrying amount of the land 3,600,000


Less: CA of liability extinguished Note payable 5,000,000
Accrued Interest 600,000 5,600,000
Loss(Gain) on extinguishment (2,000,000)

PROBLEM 9-14

CA of real estate transferred 1,000,000


Less: CA of liability liquidated 1,500,000
Loss(Gain) on liquidation (500,000)

PROBLEM 9-15

FV of the new liability 4,100,000


Less: CA of liability extinguished Note payable 5,000,000
Accrued Interest 750,000 5,750,000
Loss(Gain) on extinguishment (1,650,000)

PROBLEM 9-16

FV of the new liability PV principal 3,000,000


PV interest 796,800 3,796,800
Less: CA of liability extinguished Note payable 5,000,000
Accrued Interest 500,000 5,500,000
Loss(Gain) on extinguishment (1,703,200)

CA of the new liability 2020 3,796,800


Original interest rate 10%
Interest expense 2021 379,680

PROBLEM 9-17

FV of the new liability PV principal 3,850,000


PV interest 1,644,500 5,494,500
Less: CA of liability extinguished Note payable 6,000,000
Accrued Interest - 6,000,000
Loss(Gain) on modification (505,500)
CA of the new liability 2020 5,494,500
Original interest rate 9%
Interest expense 2020 494,505

PROBLEM 9-18

FV of the new liability PV principal 4,098,000


PV interest 2,282,400 6,380,400
Less: CA of liability extinguished Note payable 8,000,000
Accrued Interest 800,000 8,800,000
Loss(Gain) on extinguishment (2,419,600)

CA of the new liability 2020 6,380,400


Original interest rate 10%
Interest expense 2020 638,040
CA of the nJan-20 #REF!
Interest pa 320,000
Interest e #REF! #REF!
Original interest rate 10%
#REF!

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