Business, 01.12.2021 20:30 cadeedmiston
On December 31, 2020, Arthur Inc. is in financial difficulty and cannot pay a note due that day. It is a $1,000,000 note payable to Marian, Inc. that was issued at 100. Marion agrees to reduce the principle from $1,000,000 to $800,000, extend the maturity date to December 31, 2023, and reduce the interest rate to 4% (with interest payable annually on December 31). The present value of the restructured cash flows is $620,000. For Arthur, the entry for the restructure on December 31, 2020
a. does not affect net income.
b. increases net income by $380,000.
c. increases net income by $104,000.
d. increases net income by $200,000.
Answers: 2
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On December 31, 2020, Arthur Inc. is in financial difficulty and cannot pay a note due that day. It...
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