2. BaBa Black Sheep (BBS) Company loaned HowHow de Carabao (HDC) Company 17,500,00) on January 1, 2012. The terms of the loan were payment in full on January 1, 2016 plus annual interest payment at I1%. The interest payment was made as scheduled on January 1, 2013. However, due to financial setbacks, IDC Company was unable to make the 2014 interest payments. BBS Company considered the loan impaired and projected the cash flows from the loan on December 31, 2014. The bank acerued the interest on December 31, 2013, but did not continue to accrue interest for 2014 due to impairment of the loan. The projected cash flows are: Amount projected on December 31, 2014 500,00X Date of cash low December 31, 2015 December 31, 2016 December 31, 2017 December 31, 2018 1,000,(XX) 2,000,00) 4,000,00 The PV of I at 11% is 0,0 for one period; 0.81 for two perinds: 0.73 for three periods; and 0.66 for four periods. Required: a. What is the loun impairment loss on December 31, 2013? b. What is the interest income for 2015? c. What is the carrying amount of the loan receivable on December 31, 2015?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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2. BaBa Black Sheep (BBS) Company loaned HowlHow de Carabao (HDC) Company
P7,500,00X) on January 1, 2012. The terms of the loan were payment in full on January 1,
2016 plus annual interest payment at 11%. The interest payment was made as scheduled
on January 1, 2013. However, due to financial setbacks, 1IDC Company was unable to
make the 2014 interest payments. BRS Company considered the loan impaired and
projected the cash fows from the loan on December 31, 2014. The bank accrued the
interest on December 31, 2013, but did not continue to accrue interest for 2014 due to
impairment of the loan. The projected cush flows are:
Amount projected on
December 31, 2014
Date of cash Now
December 31, 2015
December 31, 2016
December 31, 2017
December 31, 2018
1,0,(XX)
2,000,00X)
4,000,000
The PV of I at 11% is 0,90 for one period; 0.81 for two perionds: 0.73 for three periods:
and 0,66 for four periods.
Required:
a. What is the loan impairment loss on December 31, 2013?
b. What is the interest income for 201s?
c. What is the carrying amount of the loan receivable on December 31, 2015?
CS
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Transcribed Image Text:2. BaBa Black Sheep (BBS) Company loaned HowlHow de Carabao (HDC) Company P7,500,00X) on January 1, 2012. The terms of the loan were payment in full on January 1, 2016 plus annual interest payment at 11%. The interest payment was made as scheduled on January 1, 2013. However, due to financial setbacks, 1IDC Company was unable to make the 2014 interest payments. BRS Company considered the loan impaired and projected the cash fows from the loan on December 31, 2014. The bank accrued the interest on December 31, 2013, but did not continue to accrue interest for 2014 due to impairment of the loan. The projected cush flows are: Amount projected on December 31, 2014 Date of cash Now December 31, 2015 December 31, 2016 December 31, 2017 December 31, 2018 1,0,(XX) 2,000,00X) 4,000,000 The PV of I at 11% is 0,90 for one period; 0.81 for two perionds: 0.73 for three periods: and 0,66 for four periods. Required: a. What is the loan impairment loss on December 31, 2013? b. What is the interest income for 201s? c. What is the carrying amount of the loan receivable on December 31, 2015? CS Scanned with CamScanner
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