Business, 22.02.2021 19:00, ImCoolJenny

On December 31, 2018, Nolte Co. is in financial difficulty and cannot pay a note due that day. It is a $3,000,000 note with $300,000 accrued interest payable to Piper, Inc. Piper agrees to accept from Nolte equipment that has a fair value of $1,450,000, an original cost of $2,400,000, and accumulated depreciation of $1,150,000. Piper also forgives the accrued interest, extends the maturity date to December 31, 2021, reduces the face amount of the note to $1,250,000, and reduces the interest rate to 6%, with interest payable at the end of each year. Nolte should recognize a gain on the partial settlement and restructure of the debt of:

a. $0.
b. $75,000
c. $275,000
d. $375,000

Answers: 1

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On December 31, 2018, Nolte Co. is in financial difficulty and cannot pay a note due that day. It is...