Ormont Corporation owed Landry Inc.,$250,000.Ormont became pressed for cash and was unable to pay the Landry debt when it came due.Rather than force Ormont into bankruptcy,Landry agrees to reduce the debt to $200,000.In which of the following cases will Ormont be required to recognize income from the discharge of the Landry debt?
$\begin{array}{llc}
&&\text { Total Liabilities }\
& \text { Total Assets } & \text { B efore Discharge } \
\text { a. } & \$ 2,000,000 & \$ 2,020,000 \
\text { b. } & \$ 2,000,000 & \$ 3,000,000 \
\text { c. } & \$ 3,000,000 & \$ 3,300,000 \
\text { d. } & \$ 3,000,000 & \$ 3,050,000
\end{array}$

Question

Ormont Corporation owed Landry Inc.,$250,000.Ormont became pressed for cash and was unable to pay the Landry debt when it came due.Rather than force Ormont into bankruptcy,Landry agrees to reduce the debt to $200,000.In which of the following cases will Ormont be required to recognize income from the discharge of the Landry debt?
$\begin{array}{llc} 
&&\text { Total Liabilities }\
& \text { Total Assets } & \text { B efore Discharge } \
\text { a. } & \$ 2,000,000 & \$ 2,020,000 \
\text { b. } & \$ 2,000,000 & \$ 3,000,000 \
\text { c. } & \$ 3,000,000 & \$ 3,300,000 \
\text { d. } & \$ 3,000,000 & \$ 3,050,000
\end{array}$

Quizplus · Accepted Answer

The Answer of Ormont Corporation owed Landry Inc.,$250,000.Ormont became pressed for cash and was unable to pay the Landry debt when it came due.Rather than force Ormont into bankruptcy,Landry agrees to reduce the debt to $200,000.In which of the following cases will Ormont be required to recognize income from the discharge of the Landry debt?
$\begin{array}{llc} 
&&\text { Total Liabilities }\
& \text { Total Assets } & \text { B efore Discharge } \
\text { a. } & \$ 2,000,000 & \$ 2,020,000 \
\text { b. } & \$ 2,000,000 & \$ 3,000,000 \
\text { c. } & \$ 3,000,000 & \$ 3,300,000 \
\text { d. } & \$ 3,000,000 & \$ 3,050,000
\end{array}$

Ormont Corporation Owed Landry Inc