Amanda Corp

question 86

Essay

Amanda Corp.owned a major business building in a small Canadian city.The building has a $1,555,000 mortgage that is held by a Canadian financial institution (FI).Amanda Corp.has had recent cash flow problems,in part,due to the low vacancy rates in the business buildings.Interest is 15 months in arrears and totals $132,000.After discussions with the FI,they agree to a financial reorganization in that they accept $50 preferred shares at a value of $1,490,000,retractable in 15 years time at book value.The shares have first claim on the proceeds of the business building,should it be sold.
Required:
Prepare the journal entry to record the exchange.

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Definitions:

Absorption

The process by which substances are taken up and assimilated into the body, such as nutrients from the digestive tract into the bloodstream.

Mechanical Breakdown

The physical process of breaking food into smaller pieces, an essential part of digestion.

Chemical Digestion

The process of breaking down food in the gut into smaller components, using enzymes, so they can be absorbed into the body.

Common Hepatic Duct

A duct in the liver that conveys bile from the liver to the cystic duct and then to the gallbladder.