Ford Corporation entered into a troubled debt restructuring agreement with their local bank. The bank agreed to accept land with a carrying value of $200,000 and a fair value of $300,000 in exchange for a note with a carrying amount of $425,000. Ignoring income taxes, what amount should Ford report as a gain on its income statement?

Question

Quizplus · Accepted Answer

Ford should report a gain of $125,000, which is the difference between the carrying amount of the note ($425,000) and the fair value of the land ($300,000).

Ford Corporation Entered into a Troubled Debt Restructuring Agreement with Their