I have a question;
Company A signed a 10 year lease term from B for office renting . B loaned A $10,000 to enter the lease. The interest rate is 10% annually and the principal will be paid at the end of 10 years.In year 2, B offered A to forgive the loan and any interest over the remaining eight years of the lease term if A remained a tenant. If A terminated the lease at any time prior to the expiration date, note and any interest would be owned pursuant to the original terms of the note. A decided to accept the offer which was effective in year 3. My question is how to account for the gain from debt forgiveness? The gain is $10,000?