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On December 31, 2018, Concord Corporation is in financial difficulty and cannot pay a note due...

On December 31, 2018, Concord Corporation is in financial difficulty and cannot pay a note due that day. It is a $2800000 note with $280000 accrued interest payable to Pharoah, Inc. Pharoah agrees to accept from Concord equipment that has a fair value of $1460000, an original cost of $2500000, and accumulated depreciation of $1160000. Pharoah also forgives the accrued interest, extends the maturity date to December 31, 2021, reduces the face amount of the note to $1340000, and reduces the interest rate to 5%, with interest payable at the end of each year. Concord should recognize a gain or loss on the transfer of the equipment of $300000 gain. $1040000 loss. $0. $120000 gain.

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