8-9: D

Principal P300,000
Interest payable (300,000 x 10%) 30,000
Carrying value P330,000

8-10: C
Restructured principal of note payable P260,000
Interest payable:
On book value (P300,000 x 10% 30%) 9,000
On restructured (P260,000 x 8% x 2) 41,600
Future cash flows to liquidate the debt P310,600

8-11: D 0

8-12: D
Loss on transfer of land:
Original cost P290,000
less: Market value P270000 P 20,000
Gain on restructuring of debt:
Carrying value of debt P300,000
less: Market value of land P270,000 P 30,000

8-13: A
Carrying amount of equipment P80,000
less: Fair value of equipment 75,000
Transfer loss P(5,000)

Carrying amount of the debt P100,000

less: Fair value of equipment transferred 75,000
Restructuring gain P 25,000

8-14: D
Carrying amount of real estate transferred P100,000
less: Fair value of real estate 90,000
Loss on restructuring of payables P(10,000)

8-15: D
Carrying amount of liability P150,000
less: Fair value of real estate transferred 90,000
Restructuring gain P 60,000

8-16: C
Gain on revaluation of land (120,000 – 85,000) P 35,000
Gain on the extinguishment of debt (185,000 – 120,000) 65,000
Total gain P100,000

8-17: A
Carrying value of debt (P800,000 + 80,000) P880,000
 less: Total future payments (P700,000 + 80,000) 780,000
Restructuring gain P100,000

8-18: A
First determine the expected future cash flows as follows:
70,000 x .79719 P55,803
5,600 x 1.69005 9,464
Present value of future cash flow P65,267

The interest revenue can be computed using the effective interest method
as follows:
Present value at 12/31/06 P65,267
Interest income at 12/31/07 (65,267 x 12%) 7,832
less: Interest receivable at 12/31/07 (70,000 x 8%) 5,600 2,232
Present value at 12/31/07 P67,499

Interest income at 12/31/08 (67,499 x 12%) P 8,100