On December 31, 2021, LOL Company is experiencing extreme financial pressure and is in default in meeting interest payment on its long-term note of P7,000,000 due on December 31, 2021. The interest rate is 10% payable every December 31.
In an agreement with the creditor, LOL obtained the following changes in the terms of the note:
* The accrued interest of P700,000 on December 31, 2021 is forgiven. The principal is reduced by P1,000,000.
*
The new interest rate is 8%.
The new date of maturity is December 31, 2026.
At the time of restructuring, the market rate of interest was 10%.
What is LOL Company's gain on debt restructuring?