Eddy Co Is Indebted to Cole Under a $800,000, 12%, Three-Year

Short Answer

Eddy Co. is indebted to Cole under a $800,000, 12%, three-year note datedDecember 31, 2013. Because of Eddy's financial difficulties developing in 2015, Eddy owed accrued interest of $96,000 on the note at December 31, 2015. Under a troubled debt restructuring, on December 31, 2015, Cole agreed to settle the note and accrued interest for a tract of land having a fair value of $720,000. Eddy's acquisition cost of the land is $580,000. Ignoring income taxes, on its 2015 income statement Eddy should report as a result of the troubled debt restructuring