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Find amount recognized as gain from debt extinguishment

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Problem 1. Dolphin Company is experiencing financial difficulty and is negotiating debt restructuring with its creditor to relieve its financial stress. Dolphin has a P2,500,000 bank loan payable with BDO Bank. The bank accepted an equity interest in Dolphin Company in the form of 200,000 ordinary shares quoted at P12 per share. The par value is P10 per share. The fair value of the bank loan payable on the date of restructuring is P2,200,000. What amount should be recognized as gain from debt extinguishment as a result of the equity swap?

Reference no: EM132673975

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