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Mandarin Company bought land for $100,000 that it held for apossible future plant site. Mandarin Company bought the propertyfor $20,000 cash payment and by signing a note secured by amortgage on the land in the amount of $80,000.Property values in the area increased significantly. When theland was worth, $300,000, Mandarin Company took out a new mortgageof $250,000 and paid off the $100,000 existing mortgage loan.Property values in the area then decreased a great deal, andMandarin Company could no longer make the payments on the mortgage.When Mandarin Company’s land had a fair market value of $175,000,the lender foreclosed on the mortgage. The lender forgave theentire debt because of Mandarin Company’s deteriorating financialcondition.  The balance of the mortgage at the time ofthe foreclosure was $190,000 but Mandarin Company was not bankruptor insolvent.How much gain or loss did Mandarin Company realize on theforeclosure? How much, if any, gain or loss must it recognize? Howmuch gross income does Mandarin Company recognize as income fromthe discharge of indebtedness?Required: The memo should include the facts, issue, conclusionand discussion on your answer. Â