Sharon Owes Lawrence Co

Multiple Choice

Sharon owes Lawrence Co. $15,000 on a note payable, plus $3,000 of unpaid interest. Lawrence agrees to accept equipment in full settlement of the debt. The equipment is recorded on Sharon's books at $12,000, and it is currently worth $14,200. What types and amounts of gains or losses, if any, should be recorded by Sharon on this troubled debt restructuring?

A) No gain or loss should be recognized.
B) Gain on Debt Restructure, $6000
C) Gain on Debt Restructure, $3,800; Gain on Disposal of Equipment, $2,200
D) $6,000 Gain on Debt Restructure, $800; Gain on Disposal of Equipment, $2,200