Chifuyu Bank loaned P10,000,000 to Baji Company on January 1, 2020, the terms of the loan require principal payments of P2,000,000 each year for 5 years plus interest at 8%. The first principal and interest payment is due on December 31, 2020. Baji made the required payments on December 31, 2020, and December 31, 2021. However, Baji began to experience financial difficulties during 2022 which requires the bank to reassess the collectibility of the loan. On December 31, 2022, the bank determined that the remaining principal payments will be collected but the collection of the interest is unlikely. The bank accrued the interest for 2022. Expected Principal Payments December 31, 2023 P3,000,000 December 31, 2024 2,000,000 December 31, 2025 1,000,000 Note: Round off present value factors up to four decimal points; round off the final value up to two decimal points. E.g., 0.7812 and 123,518.25 Questions: How much is the impairment loss to be recorded in 2022? How much is the carrying amount on the loan as of December 31, 2024?
Chifuyu Bank loaned P10,000,000 to Baji Company on January 1, 2020, the terms of the loan require principal payments of P2,000,000 each year for 5 years plus interest at 8%. The first principal and interest payment is due on December 31, 2020. Baji made the required payments on December 31, 2020, and December 31, 2021. However, Baji began to experience financial difficulties during 2022 which requires the bank to reassess the collectibility of the loan. On December 31, 2022, the bank determined that the remaining principal payments will be collected but the collection of the interest is unlikely. The bank accrued the interest for 2022. Expected Principal Payments December 31, 2023 P3,000,000 December 31, 2024 2,000,000 December 31, 2025 1,000,000 Note: Round off present value factors up to four decimal points; round off the final value up to two decimal points. E.g., 0.7812 and 123,518.25 Questions: How much is the impairment loss to be recorded in 2022? How much is the carrying amount on the loan as of December 31, 2024?
Chapter16: Working Capital Policy And Short-term Financing
Section: Chapter Questions
Problem 19P
Related questions
Question
Chifuyu Bank loaned P10,000,000 to Baji Company on January 1, 2020, the terms of the loan require principal payments of P2,000,000 each year for 5 years plus interest at 8%. The first principal and interest payment is due on December 31, 2020. Baji made the required payments on December 31, 2020, and December 31, 2021. However, Baji began to experience financial difficulties during 2022 which requires the bank to reassess the collectibility of the loan. On December 31, 2022, the bank determined that the remaining principal payments will be collected but the collection of the interest is unlikely. The bank accrued the interest for 2022.
| Expected Principal Payments | |
| December 31, 2023 | P3,000,000 |
| December 31, 2024 | 2,000,000 |
| December 31, 2025 | 1,000,000 |
Note: Round off present value factors up to four decimal points; round off the final value up to two decimal points.
E.g., 0.7812 and 123,518.25
Questions:
- How much is the impairment loss to be recorded in 2022?
- How much is the carrying amount on the loan as of December 31, 2024?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 5 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning