On December 31, 2003, Poore Co. is in financial difficulty and cannot pay a note due that day. It is a $400,000 note with $40,000 accrued interest payable to Dark, Inc. Dark agrees to forgive the accrued interest, extend the maturity date to December 31, 2005, and reduce the interest rate to 4%. The present value of the restructured cash flows is $342,000.