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

question 35

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?
a.
$\begin{array}{lrr}\text { Loan Payable } & 150,000 & \\\text { Interest Payable } & 7,500 & \\\text { Equipment } & & 60,000 \\\text { Restructured Debt } & & 90,000 \\\text { Gain on Restructure } && 7,500\end{array}$

b.
$\begin{array}{lrr}\text { Loan Payable } & 150,000 & \\\text { Loss on Restructure } & 5,000 & \\\text { Equipment } & & 60,000 \\\text { Gain on Transfer of Equipment } && 5,000 \\\text { Restructured Debt } && 90,000\end{array}$

c.
$\begin{array}{lrr}\text { Loan Payable } & 150,000 & \\\text { Interest Payable } & 7,500 & \\\quad \text { Equipment } & & 60,000 \\\text { Gain on Transfer of Equipment } && 5,000 \\\text { Restructured Debt } && 90,000 \\\text { Gain on Restructure } && 2.500\end{array}$

d.
$\begin{array}{lrr}\text { Loan Payable } & 150,000 & \\\text { Interest Payable } & 7,500 & \\\quad \text { Equipment } & & 65,000\end{array}$

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Definitions:

Personal Objectives

Individual goals or targets that a person aims to achieve, which can influence their behavior and performance.

Organizational Politics

The activities and behaviors within an organization aimed at acquiring, developing, and using power and other resources to obtain one's preferred outcomes.

Resource Allocation

The process of assigning available resources, such as time, money, or personnel, to specific tasks, projects, or priorities.

Organizational Politics

The use of power and social networking within an organization to achieve changes that benefit the individual or a group, often at the expense of others.