Liabilities of $200,000 were settled in full for $125,000. The $75,000 difference is reported on the statement of realization and liquidation as:

Name: Liabilities of $200,000 were settled in full for $125,000. The $75,000 difference is reported on the statement of realization and liquidation as:
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Quizplus · Accepted Answer

This $75,000 difference is considered a gain because the liabilities were settled for less than their full amount, resulting in a financial benefit to the entity.

Liabilities of $200,000 Were Settled in Full for $125,000