Items 1 and 2 are based on the following:

The following information pertains to the transfer of real estate pursuant to a troubled debt restructuring by Knob Co. to Mene Corp. in full liquidation of Knob’s liability to Mene:

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Carrying amount of liability liquidated

$150,000

Carrying amount of real estate transferred

100,000

Fair value of real estate transferred

90,000

What amount should Knob report as a gain (loss) on restructuring of payables?

  1. $(10,000)
  2. $0
  3. $50,000
  4. $60,000

What amount should Knob report as a gain (loss) on transfer of real estate?

  1. $(10,000)
  2. $0
  3. $50,000
  4. $60,000