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QUESTION
ABC Company is having financial difficulty and has requested the bank restructure its $4 million note outstanding. The current note has 5 remaining...
- ABC Company is having financial difficulty and has requested the bank restructure its $4 million note outstanding. The current note has 5 remaining years and pays an interest rate of 10%. The current market rate for a loan of this nature is 12%. ABC's note was issued at face value. The bank has agreed to accept land in exchange for relinquishing its claim on this note. The land has a book value of $2.95 million and a fair value of $3.5 million. (Note. Do not include the restructure date in your updated statements.)
