Current Attempt in Progress

Novak Co$.$ is indebted to Sunland under a $$1040000,13\%,$ three$-$year note dated December $31,2023.$ Because of financial difficulties that developed in $2025,$ Novak owed accrued interest of $$135200$ on the note at December $31,2025.$ Under a troubled debt restructuring, on December $31,2025,$ Sunland agreed to settle the note and accrued interest for a tract of land having a fair value of $$920000.$ Novak's acquisition cost of the land is $$718000.$ Ignoring income taxes, on its $2025$ income statement, what should Novak report as a result of the troubled debt restructuring?

Gain on Disposal

Restructuring Gain

$$322000$

$$0$

$$202000$

$$120000$

$$457200$

$$0$

$$202000$

$$255200$