At December 31, 2019, one of MNO Company's credit customers, 123A, is experiencing financial difficulties. As a result, 123A has missed the payment of the principal amount of its notes payable of P3,000,000 and accrued interest for the year is P300,000. A restructuring arrangement was approved by the management of MNO Company, as follows: * The principal was reduced to P2,000,000 and will be due on December 31, 2021. * Accrued interest of P300,000 is condoned. * Interest rate is reduced to 8% payable on December 31, 2020, and December 31, 2021. The prevailing market interest rate for similar instrument at the time of restructuring (December 31, 2019) is 12%. What is the impairment loss to be recognized in December 31, 2019? (Use four decimal places for the PV factor)

At December 31, 2019, one of MNO Company's credit customers, 123A, is experiencing financial difficulties. As a result, 123A has missed the payment of the principal amount of its notes payable of P3,000,000 and accrued interest for the year is P300,000. A restructuring arrangement was approved by the management of MNO Company, as follows: * The principal was reduced to P2,000,000 and will be due on December 31, 2021. * Accrued interest of P300,000 is condoned. * Interest rate is reduced to 8% payable on December 31, 2020, and December 31, 2021. The prevailing market interest rate for similar instrument at the time of restructuring (December 31, 2019) is 12%. What is the impairment loss to be recognized in December 31, 2019? (Use four decimal places for the PV factor)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

50. During the year 2020, Ali Al Shaibani group of companies made the total credit purchases worth RO 912500. For the accounting year 2020, the opening accounts payable of the company were RO 125000, and the closing accounts payable of the company was RO 75000. Using the information, calculate the Average Payment period of the company. (Consider 365 days in a year) a. None of the options b. 80 c. 42 d. 40
At December 31, 2021, ABC Company has an outstanding purchase commitment with contract purchase price of P 1,000,000 and the market value on this date is P 950,000 which is different from the expected market value of P 990,000. QUESTION: What is the amount of Loss on Purchase Commitment to be recorded at December 31, 2021?
On January 1, 2020, Allure Company sold an equipment with a carrying amount of P800,000, receiving a noninterest bearing note due in three years with a face amount of P1,000,000. There is to established market value for the equipment. The interest rate on similar obligations is 12%, The present value of 1 at 12% for three periods is .712. What amount should be reported as interest income for 2020/ A.288,000 B.120,000 C.96,000 D.85,440
The prepaid rent is P120,000 good for one year starting November 30, 2020. The balance sheet date is December 31, 2020. The prepayment was recorded under asset method. The correct rent expense for the given period would be:
D is obliged to give C P50,000.00 with interest at 12% per annum on December 31, 2020 pursuant to a contract of loan. Question: What are the requisites of obligation? Discuss and apply your answers to the problem given above.
On December 31, 2021, Ainsley Company finished consultation services and accepted exchange a zero interest bearing of $ 995,000 and a due date of December 31, 2024. The implied interest rate is 12%. The following interest factors are provided Table Factors For Three Periods Future Value of 1 Present Value of 1 Future Value of Ordinary Annuity of 1 Present Value of Ordinary Annuity of 1 Interest Rate 6% 12% 1.19102 1.40493 0.83962 0.71178 3.18360 3.37440 2.67301 2.40183 Instructions (a) Determine the present value of the note. (b) Prepare the journal entries for the initial transaction , recognition of Interest each year, and the colle Instructions: Compute both a must show your work
Impairment of zero-interest notes receivable, GAAP vs. IFRS On December 31, 2020, Firth Company borrowed $62,092 from Paris Bank, signing a 5-year, $100,000 zero-interest note. The note was issued to yield 10% interest. Unfortunately, during 2022, Firth began to experience financial difficulty. As a result, at December 31, 2022, Paris Bank determined that it was probable that it would collect only $75,000 at maturity. The market rate of interest on loans of this nature is now 11%. 1,Instructions: On March 31, 2023, Paris learns that Firth will be able to repay the loan under the original terms. Paris Bank uses IFRS. Prepare the journal entry to be recorded on March 31, 2023, if any. Answer within 45mins.it would be really helpful!
On March 2021, Company A enters a forward rate agreement(FRA) with company B to borrow $1 million at 4% between October 2021 and December 2021(three months). The term structure of interest rates is flat at 5%. The value of the FRA contract for Company A is
Please answer, round off final answers to two decimal places (1)
On December 31, 2023, Crane Bank enters into a debt restructuring agreement with Troubled Inc., which is now experiencing financial trouble. The bank agrees to restructure a $1.0-million, 10% note receivable issued at par by the following modifications: 1. Reducing the principal obligation from $1.0 million to $0.80 million Extending the maturity date from December 31, 2023, to December 31, 2026 Reducing the interest rate from 10% to 9% 2. 3. Troubled pays interest at the end of each year. On January 1, 2027, Troubled Inc. pays $0.80 million in cash to Crane Bank for the principal. The market rate is currently 9%. Answer the following questions related to Crane Bank (the creditor). Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. What interest rate should Crane Bank use to calculate the loss on the debt restructuring? Interest rate List of Accounts 10 % Using (1) factor tables, (2) a financial calculator, or…
On 30 June 2018, Bamberga Ltd borrowed $600,000 as an interest-only loan at 8% for 5 years. In relation to this loan, state, to the nearest whole dollar, the amount that would be reported in the Statement of financial position on 30 June 2022 as a current liability.