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-000- Problem 6 Debt Restructuring | Due to extreme financial difficulties, Koronadal Company has negotiated a restructuring of its 10%, P5,000,000 note payable due on December 31, 2018. The unpaid interest on the note on such date is P500,000. The creditor has agreed to reduce the face value to P4,000,000 forgive the unpaid interest, reduce the interest rate to 8% and extend the due date three years from December 31, 2018. The present value of 1 at 10% for three periods is 0.75 and present value of an ordinary annuity of 1 at 10% for three periods is 2.49. Based on the above data, answer the following: 26. What is the gain on extinguishment of debt to be recognized by Koronadal Company on December 31, 2018? 27. What is the interest expense to be recognized by Koronadal Company for the year 2019? -000- Problem 7 Debt Restructuring | On January 1, 2018, Sarangani Company showed the following: Long-term note P6,000,000 At the end of 2017, Sarangani had started to experience extreme financial pressure and is in default in meeting interest payment on its long-term note. This had continued until 2018. The company did not accrue the interest for 2018. The interest rate is 10% payable every December 31. In an agreement with the creditor, Sarangani Corporation obtained the following changes in the terms of the note. The accrued interest is forgiven. The principal obligation will be due on December 31, 2023. The new interest rate is 8% 28. What is the gain on debt restructuring to be recognized by Sarangani? --End of workbook