During 2018 marquis company was encountering financial difficulties and seemed likely to default on a $300,000, 10%, four-year note dated january 1, 2016, payable to third bank. interest was last paid on december 31, 2017. on december 31, 2018, third bank accepted $250,000 in settlement of the note. ignoring income taxes, what amount should marquis report as a gain from the debt restructuring in its 2018 income statement?
a) $20,000.b) $50,000.c) $80,000.d) $0.

The answer is: C) $80,000

Explanation:

Marquis Company should recognize gains from both a reduction in the debt's principal and its interest.

The debt principal was $300,000 and the interests were $30,000 (10% of the principal), their total amount was $330,000. If the bank accepted $250,000 as total settlement for the debt, then the difference between the total debt and the settling payment is considered gain: $330,000 - $250,000 = $80,000

d, conspicuous consumption is when you try to increase your wealth or social status (and in the case he's trying to create the perception of wealth considering he can't really afford it)

one of the disadvantages of getting a government sponsored mortgage is they put a limit on the purchase price of the house. because the government is in charge of the mortage loan and terms, they are able to control how much money they are allowing someone to take out for the loan. not only are they incontrol, it's a lengthy process for a government sponsored mortgage.