During 20X5 Peterson Company experienced financial difficulties and is likely to default on a $500,000, 15%, three-year note dated January 1, 20X4, payable to Forest National Bank. On December 31, 20X5, the bank agreed to settle the note and unpaid interest of $75,000 for 20X5 for $50,000 cash and marketable securities having a current market value of $375,000. Peterson's acquisition cost of the securities is $385,000. Ignoring income taxes, what amount should Peterson report as a gain from the debt restructuring in its 20X5 income statement

The amount that Peterson should report as a gain from the debt restructuring in its 20X5 income statement is $150,000.

Explanation:

This can be calculated as follows:

Details                                                                       Amount ($)  

Principal                                                                      500,000

Interest accrued                                                            75,000  

Net carrying amount                                                  575,000

Settlement price:

Cash                                                                            (50,000)

Current market value of marketable securities      (375,000)  

Gain from debt restructuring                                   150,000  

Therefore, the amount that Peterson should report as a gain from the debt restructuring in its 20X5 income statement is $150,000.

Note: The gain calculated above is a gain before tax. The applicable tax rate to Peterson Company in its country of operation has to be used by it to determine its gain after tax.

d. government mandate economics

Explanation:

during the industrial era the government stepped in to stop wealthy monopoly companies from corruption of the government