1. What is the interest income for 2021?2. What is the carrying value of the loan receivables to be presented in the statement of financial position as of December 31, 2022? 2-3Loans ReceivablesGreen Bank loaned P9,000,000 to a borrower on January 1, 2018.The terms of the loan were payment in full on January 1, 2023,plus annual interest payment at 12%. The interest payment wasmade as scheduled on January 1, 2019. However, due tofinancial setbacks, the borrower was unable to make the 2020interest payment. The bank considered the loan impaired andprojected the cash flows from the loan on December 31, 2020.The bank has accrued the interest on December 31, 2019, butdid not continue to accrue interest for 2020 due to theimpairment of the loan. The projected cash flows are:Amount Projected onDecember 31, 20201,500,000Date of Cash flowDecember 31, 2022December 31, 20232,000,000December 31, 20242,500,000December 31, 20253,000,000The present value of 1 at 12% is .89 for one period; .80 for twoperiods; .71 for three periods; .64 for four periods; and .57 forfive periods.

Impairment Loss arises when carrying value as at the beginning is greater than the recoverable…

Answered: 1. What is the interest income for…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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1. What is the interest income for 2021?
2. What is the carrying value of the loan receivables to be
presented in the statement of financial position as of
December 31, 2022?

2-3
Loans Receivables
Green Bank loaned P9,000,000 to a borrower on January 1, 2018.
The terms of the loan were payment in full on January 1, 2023,
plus annual interest payment at 12%. The interest payment was
made as scheduled on January 1, 2019. However, due to
financial setbacks, the borrower was unable to make the 2020
interest payment. The bank considered the loan impaired and
projected the cash flows from the loan on December 31, 2020.
The bank has accrued the interest on December 31, 2019, but
did not continue to accrue interest for 2020 due to the
impairment of the loan. The projected cash flows are:
Amount Projected on
December 31, 2020
1,500,000
Date of Cash flow
December 31, 2022
December 31, 2023
2,000,000
December 31, 2024
2,500,000
December 31, 2025
3,000,000
The present value of 1 at 12% is .89 for one period; .80 for two
periods; .71 for three periods; .64 for four periods; and .57 for
five periods.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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