When a debt is forgiven the accounting treatment is to:
A) Debit the liability; credit a deferred benefit account.
B) Credit a gain on release account; debit the liability.
C) Debit the gain on release account; credit the liability.
D) Debit a deferred benefit account; credit a debt defeasance account.
E) None of the given answers.

Question

Quizplus · Accepted Answer

When a debt is forgiven, the liability is removed by debiting it, and a gain is recognized by crediting a gain on release account.

When a Debt Is Forgiven the Accounting Treatment Is To