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  3. years ago, february frost inc. (ffi) borrowed $675

Years ago, February Frost Inc. (FFI) borrowed $675,000 from Sweetheart Corporation (Sweet) in the form...

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Accounting

Years ago, February Frost Inc. (FFI) borrowed $675,000 from Sweetheart Corporation (Sweet) in the form of a 10 year, 10% note due on December 31,2024. FFI has had declining sales in the last two years and has had trouble making their payroll in a timely manner in the currrent year.
It is December 31,2024. Since FFI is in financial trouble, Sweet has agreed to extend the maturity date of the not to December 31,2026, reduce the principal to $600,000, and reduce the interest rate to 6%, payable annually on December 31. When the original note was issued, it was issued at par. The current market rate is 6%. Both companies prepare their financial statements under IFRS.
a) Is this a settlement of debt or a continuation of debt with midification of terms? (show your work)
b) Prepare the journal entries that are required on FFI's books and financial records on December 31,2024,2025, and 2026.

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