PROBLEM 1On December 31, 2023, JFG Company, a financing institution, lentP4,000,000 to MFG Company due 3 years after. The loan issupported by an 8% note receivable. Transaction costs incurred tooriginate the loan amounted to P248,000. P374,000 waschargeable to MFG as origination fees. Interest on the loan iscollectible at the end of each year. The yield rate on the loan afterconsidering the direct origination fees and origination costs incurredis 9.25%.JFG was able to collect interest as it became due at the end of2024. During 2025, however, due to MFG Company's businessdeterioration and due to political instability and faltering globaleconomy, the company was not able to collect amounts due at theend of 2025. After reviewing all available evidence at December 31,2025, JFG determined that it was probable that MFG would payback only P3,400,000 collectible as follows:December 31, 2027December 31, 2028December 31, 2029December 31, 2030P1,400,0001,000,000600,000400,000As of December 31, 2025, the prevailing rate of interest for all debtinstruments is 14%. Moreover, JFG Company accrued the intereston December 31, 2025.Based on the above and the result of your audit, answer thefollowing: (Round off PV factors to 4 decimal places)1. What is the carrying amount of the loan receivable as ofDecember 31, 2024?2. What is the loan impairment loss to be recognized in the 2025statement of comprehensive income?3. What is the interest income to be recognized in the 2027statement of comprehensive income?4. What is the carrying amount of the loan receivable as ofDecember 31, 2027?

Impairment Loss-:An Impairment Loss is a prominent reduction in the carrying amount of an investment…

On December 31, 2023, JFG Company, a financing institution, lent P4,000,000 to MFG Company due 3 years after. The loan is supported by an 8% note receivable. Transaction costs incurred to originate the loan amounted to P248,000. P374,000 was chargeable to MFG as origination fees. Interest on the loan is collectible at the end of each year. The yield rate on the loan after considering the direct origination fees and origination costs incurred

On December 31, 2023, JFG Company, a financing institution, lent P4,000,000 to MFG Company due 3 years after. The loan is supported by an 8% note receivable. Transaction costs incurred to originate the loan amounted to P248,000. P374,000 was chargeable to MFG as origination fees. Interest on the loan is collectible at the end of each year. The yield rate on the loan after considering the direct origination fees and origination costs incurred

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter9: Current Liabilities, Contingencies, And The Time Value Of Money

Section: Chapter Questions

Problem 9.9AMCP

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