How much gain should be recognized on modification of terms

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Question - Due to adverse economic circumstances and poor management, Sultan Company has negotiated a restructuring of its P10,000,000 note payable to Kudarat Bank. Kudarat Bank has agreed to reduce the face value of the note to P8,000,000 and extend the due date three years from the date of restructuring. However the interest rate was increased from 15% to 21%. The restructuring will occur on December 31, 2020. There is no unpaid interest on the restructured loan at this time. The tax rate is 30%. In accordance with PFRS 9, how much gain should be recognized on modification of terms?

Reference no: EM132540109

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