Fall 2013_Acc 3100_Ch 14

Lets look at the entries on the books of the

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Unformatted text preview: on the books of the developer at $17,000,000. Let’s look at the entries on the books of the developer to record the settlement. Land …...................................................... Gain on disposal of land …......... 3,000,000 3,000,000 ($20,000,000 less carrying value of $17,000,000) Note payable …............................................ Gain on troubled debt restructuring. Land…………………………………. 30,000,000 10,000,000 20,000,000 14-37 Debt is Continued, but with Modified Terms Let’s look at an example where the total cash payments are less than Let’s look at an example where the total cash payments are less than tthe carrying amount of the debt. First Prudent Bank holds a $30,000,000 he carrying amount of the debt. First Prudent Bank holds a $30,000,000 note from a property developer. The note bears interest at 10%, and note from a property developer. The note bears interest at 10%, and matures in two years. The developer is in financial difficulty and the bank matures in two years. The developer is in financial difficulty and the bank agrees to m...
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