Multiple Choice
On December 31, 2013, Manny Ltd. owes Stew Corp. $50,000 on a 10% note payable. Two years of interest is also unpaid and due. Manny cannot pay off the debt. Stew agrees to reduce the principal amount to $30,000, forgive the accrued interest owed, extend the due date to December 31, 2016, and reduce the interest rate to 5% per year for the extended period. What amount of gain on restructuring should Manny record?
A) $25,500
B) $21,000
C) $20,000
D) $11,000
Correct Answer:
Verified
Correct Answer:
Verified
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