On December 31, 20?1, an entity enters into a restructuring

On December 31, 20?1, an entity enters into a restructuring agreement to modify the terms of its existing loan as follows:

The principal is reduced from P2,800,000 to P2,500,000.

  The lender waived the accrued interest of P400,000. 

The nominal rate is decreased from 14% to 9%.

The maturity date is extended from December 31, 20×1 to January 1, 20×6.

The principal is due in lump sum at maturity date but interest is payable annually at each year-end. The original effective interest rate is 14%. The prevailing rate on December 31, 20?1 is 12%.

 Requirement: Provide the entry to record the modification of the loan.