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What is the amount of gain on restructuring the debtor

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Ana is experiencing financial difficulties. Income has exhibited a downward trend, and the company reported its first loss in company history this past year. The firm has been unable to service its debt and, as a result has missed two semi-annual interest payments. In an attempt to turn the company around, management has negotiated a modification of its debt terms with bondholders. These modified terms are effective January 2, 2020, the bonds are Php 10,000,000, 10 year, 10% bonds that were issued on January 2, 2015 at a prevailing rate of 8%.

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Question 1: Assuming the bondholders a free to forgive past due interest and reduce the interest rate on the debt from 10% to 6%, what is the amount of gain on restructuring the debtor must recognize?

Reference no: EM132867186

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