PROBLEM 1 (C9)

1. Bank loan payable 5,000,000

Accrued Interest 1,000,000
Total Liability 6,000,000
Less: Current Asset
Land 1,500,000
Building (6,000,000 - 1,800,000) 4,200,000 5,700,000
Gain on extinguishment of debt 300,000

2. Bank loan payable 5,000,000

Accrued interest 1,000,000
Accumulated depreciation - Building 1,800,000
Building 6,000,000
Land 1,500,000
Gain on extinguishment of debt 300,000

PROBLEM 2 (C9)

Notes payable 6,000,000

Accrued Interest payable 600,000
Total liability 6,600,000
Less: Carrying amount of Inventory 3,000,000
Gain on extinguishment of debt 3,600,000

Note payable 6,000,000

Accrued Interest payable 600,000
Inventory 3,000,000
Gain on extinguishment of debt 3,600,000

PROBLEM 3 (C9)

1. Mortgage payable 5,000,000

Accrued interest payable 500,000
 Share capital 3,500,000
Share premium (35,000 x (130-100=30)) 1,050,000
Gain on extinguishment of debt 950,000

Mortgage payable 5,000,000

Accrued interest payable 500,000
Carrying amount of mortgage payable 5,500,000
Less: Fair value of the share capital (35,000 x 130/share) -4,550,000
Gain on extinguishment of debt 950,000

2. Mortgage payable 5,000,000

Accrued interest payable 500,000
Share capital 3,500,000
Share premium 1,200,000
Gain on extinguishment of debt 800,000

Fair value of the mortgage

payable 4,700,000
Less: par value of the shares issued (35,000 x 1,000) -3,500,000
Share premium 1,200,000

Mortgage payable 5,000,000

Accrued interest payable 500,000
Carrying amount of mortgage payable 5,500,000
Less: Fair value of the liability -4,700,000
Gain on extinguishment of debt 800,000

3. Mortgage payable 5,000,000

Accrued interest payable 500,000
Share capital 3,500,000
Share premium 2,000,000

Mortgage payable 5,000,000

Accrued interest payable 500,000
Carrying amount of mortgage payable 5,500,000
Less: Fair value of the liability (35,000 x 100) 3,500,000
Share premium 2,000,000