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?
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?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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