Epsilon Enterprises (EE) owns a factory it no longer uses valued at $800,000 that has a $1,000,000 mortgage with an interest rate of six percent.

Epsilon Enterprises (EE) owns a factory it no longer uses valued at $800,000 that has a $1,000,000 mortgage with an interest rate of six percent. The interest payments are current, but it cannot afford to continue to pay the mortgage payments to Zeta National Bank (ZNB). Therefore, EE negotiated a settlement whereby they will give the building and a new $150,000 ten-year six percent note to ZNB and ZNB will release EE’s obligation for the previous loan. Record the journal entries under US GAAP and IFRS for ZNB.

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