Guido Properties owes First State Bank $60 million under a 7% note with two years remaining to maturity. Due to financial difficulties of Guido, the previous year's interest ($4.2 million) was not received. The bank agrees to settle the note receivable and accrued interest receivable in exchange for land having a fair market value of $44 million.
Required: Compute the loss on troubled debt restructuring that the bank would record.

Question

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The Answer of Guido Properties owes First State Bank $60 million under a 7% note with two years remaining to maturity. Due to financial difficulties of Guido, the previous year's interest ($4.2 million) was not received. The bank agrees to settle the note receivable and accrued interest receivable in exchange for land having a fair market value of $44 million.
Required: Compute the loss on troubled debt restructuring that the bank would record.

Guido Properties Owes First State Bank $60 Million Under a 7