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Crane Company is indebted to Wildhorse under a $1015000, 12%, three-year note dated December 31, 2016....

Crane Company is indebted to Wildhorse under a $1015000, 12%, three-year note dated December 31, 2016. Because of Crane's financial difficulties developing in 2018, Crane owed accrued interest of $121800 on the note at December 31, 2018. Under a troubled debt restructuring, on December 31, 2018, Wildhorse agreed to settle the note and accrued interest for a tract of land having a fair value of $910000. Crane's acquisition cost of the land is $707000. Ignoring income taxes, on its 2018 income statement what should Crane report as its gain on disposal and restructuring gain?

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Answer #1

Gain on restructuring should be recognised for the value of difference between carrying value of the loan and fair value of asset which is

Carrying value 1136800

Less fair value 910000

Gain on restructuring 226800

Gain on disposal is not recognised

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