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Question(s) / Instruction(s):


*Pr. 14-115—Accounting for a troubled debt settlement.
Finney, Inc., which owes Carson Co. $800,000 in notes payable, is in financial difficulty. To eliminate the debt, Carson agrees to accept from Finney land having a fair market value of $610,000 and a recorded cost of $450,000.

Instructions
(a)     Compute the amount of gain or loss to Finney, Inc. on the transfer (disposition) of the land.
(b)     Compute the amount of gain or loss to Finney, Inc. on the settlement of the debt.
(c)     Prepare the journal entry on Finney's books to record the settlement of this debt.
(d)     Compute the gain or loss to Carson Co. from settlement of its receivable from Finney.
(e)     Prepare the journal entry on Carson's books to record the settlement of this receivable.

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