Equipment with a Fair Value of $65,000 and a Cost

question 42

Short Answer

Equipment with a fair value of $65,000 and a cost basis of $60,000 is transferred to a creditor in partial settlement of a debt of $150,000 plus accrued interest of $7,500. The balance of the debt will be satisfied by 3 equal payments of $30,000 over the next three years. Which of the following journal entries best records the restructure?

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Definitions:

Insight

The capacity to gain an accurate and deep understanding of a person or situation.

Trial And Error

A method of problem-solving that involves testing various possibilities until a satisfactory solution is found.

Mental Set

A cognitive framework or mindset that influences how a person approaches and solves problems, often based on past experiences.

Problem-Solving Strategy

An approach or technique used to address a challenge or overcome an obstacle in a systematic manner, often involving specific steps or methods.