When a Debtor Satisfies a Liability by Exchanging an Asset

Multiple Choice

When a debtor satisfies a liability by exchanging an asset of lesser value, it records the transfer

A) on the basis of the fair value of the asset transferred and recognizes a gain on the debt restructuring.
B) on the basis of the fair value of the asset transferred and recognizes a loss on the debt restructuring.
C) on the basis of the future value of the asset transferred and recognizes a gain on the debt restructuring.
D) on the basis of the future value of the asset transferred and recognizes a loss on the debt restructuring.