B. MATATAG Bank loaned P5,000,000 to a borrower on January 1, 2019. The term of the loan require principal payments of P1,000,000 each year for 5 years plus interest at 8%. The first principal and interest payment is due on January 1, 2020. The borrower made the required payments during 2020 and 2021. However, during 2021 the borrower began to experience financial difficulties, requiring the bank to reassess the collectability of the loan. On December 31, 2021, the bank has determined that the remaining principal payment will be collected as originally scheduled but the collection of the interest is unlikely. The bank did not accrue the interest on December 31, 2021. Present value of 1 at 8% 0.926 For one period For two periods For three periods 0.857 0.794 1. What is the impairment loss for 2021? а. 423,000 b. 217,000 c. 222,000 d. 0 2. What is the interest income for 2022? a. 126,160 b. 142,640 c. 240,000 d. 0 3. What is the carrying amount of the loan receivable on December 31, 2022? а. 2,000,000 b. 1,925,640 c. 1,640,360 d. 1,783,000

B. MATATAG Bank loaned P5,000,000 to a borrower on January 1, 2019. The term of the loan require principal payments of P1,000,000 each year for 5 years plus interest at 8%. The first principal and interest payment is due on January 1, 2020. The borrower made the required payments during 2020 and 2021. However, during 2021 the borrower began to experience financial difficulties, requiring the bank to reassess the collectability of the loan. On December 31, 2021, the bank has determined that the remaining principal payment will be collected as originally scheduled but the collection of the interest is unlikely. The bank did not accrue the interest on December 31, 2021. Present value of 1 at 8% 0.926 For one period For two periods For three periods 0.857 0.794 1. What is the impairment loss for 2021? а. 423,000 b. 217,000 c. 222,000 d. 0 2. What is the interest income for 2022? a. 126,160 b. 142,640 c. 240,000 d. 0 3. What is the carrying amount of the loan receivable on December 31, 2022? а. 2,000,000 b. 1,925,640 c. 1,640,360 d. 1,783,000

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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Question

B. MATATAG Bank loaned P5,000,000 to a borrower on January 1, 2019. The term of the
loan require principal payments of P1,000,000 each year for 5 years plus interest at 8%.
The first principal and interest payment is due on January 1, 2020. The borrower made
the required payments during 2020 and 2021.
However, during 2021 the borrower began to experience financial difficulties, requiring
the bank to reassess the collectability of the loan.
On December 31, 2021, the bank has determined that the remaining principal payment
will be collected as originally scheduled but the collection of the interest is unlikely.
The bank did not accrue the interest on December 31, 2021.
Present value of 1 at 8%
0.926
For one period
For two periods
For three periods
0.857
0.794
1. What is the impairment loss for 2021?
а. 423,000
b. 217,000
c. 222,000
d. 0
2. What is the interest income for 2022?
a. 126,160
b. 142,640
c. 240,000
d. 0
3. What is the carrying amount of the loan receivable on December 31, 2022?
а. 2,000,000
b. 1,925,640
c. 1,640,360
d. 1,783,000
*****

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