A corporation has an overdue bonds payable of P3,000,000. The note was dated January 1, 2018. It has an annual interest rate of 10%, and interest is paid December 31 of each year.

The corporation paid interest in 2018 but was not able to pay interest in 2019.

The current effective interest rate is 8%.

On January 1, 2020, the corporation agreed to the following restructuring arrangement:

• Reduce the principal to P2,500,000
• Forgive accrued interest
• Reduce interest rate to 9%
• Extend maturity date to December 31, 2024

Determine gain (loss) on extinguishment of the obligation due to restructuring. Round present value factors to four decimal points.

a. 824,031 

b. 875,009 

c. 717,870 

d. 894,820`

Answer rating: 100% (QA)

Solution given 1 Jan 2020 go No Dato Bond payable P3000000 Interest R... View the full answer