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

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