Problem
Pumpkin Company is going through bankruptcy reorganization. It signed a $325,000 note payable prior to the order for relief. The company believes that this note will be settled for $85,000 in cash. It is also possible that the creditor will instead take a piece of land that cost the company $75,000 but is valued at $97,000. On a balance sheet prepared during the reorganization period, how will this debt be reported?