Use the Following Information for Questions

question 13

Multiple Choice

Use the following information for questions. On December 31, 2014, Diaz Corp.is in financial difficulty and cannot pay a $900,000 note with $90,000 accrued interest payable to Cameron Ltd., which is now due.Cameron agrees to accept from Diaz equipment that has a fair value of $435,000, an original cost of $720,000, and accumulated depreciation of $345,000.Cameron also forgives the accrued interest, extends the maturity date to December 31, 2017, reduces the face amount of the note to $375,000, and reduces the interest rate to 6%, with interest payable at the end of each year.
-Diaz should record interest expense for 2017 of

• A)$0.
• B)$22,500.
• C)$45,000.
• D)$67,500.

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Definitions:

Functional Group

An atom or group of atoms within a molecule that has a characteristic physical and chemical behavior.

Alkene

Hydrocarbons containing at least one carbon-to-carbon double bond, involved in various chemical reactions due to the reactivity of this bond.

Molecule

The tiniest unit of a chemical element or compound that retains the chemical characteristics of that element or compound.

KCl

Potassium chloride, a metal halide salt composed of potassium and chlorine, used in various applications including as a fertilizer.