On January 1, 2018, Almost Inc. loaned P3,000,000 to Stay Company. Under the loan agreement, StayCompany is to make an annual principal payment of P600,000 for 5 years plus interest at 8%. The firstprincipal and interest payment is due on January 1, 2019. The required payments were made by StayCompany for 2019 and 2020. However, during 2020, Stay Company began to face financial difficulties,requiring Almost Inc. to reevaluate the collectability of the loan.On December 31, 2020, Almost Inc. determines that it will be able to collect the remaining principal, but itis unlikely that the interest will be collected.The following present value factors are taken from the table of present values:PV of 1 at 8% for:1 period2 periods3 periods0.925930.857340.79383What is the present value of the expected future cash flows as of December 31,2020?O 1,800,000O 2,146,260O 1,669,962O 1,428,894 Refer to the previous problem. What is the amount of loan impairment onDecember 31, 2020?371,106130,038730,038Assuming that Almost Inc.'s assessment of the collectability of the loan has notchanged, what amount of interest income should be recognized for 2021?P85,597P144,000P96,000P133,597

Impairment=Carrying value of loan-present value of cash flows

Answered: Company is to make an annual principal…

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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Maris Banking Corporation granted a loan to a borrower on January 1, 2020. The interest rate on the loan is 10% payable annually starting December 31, 2020. The loan matures in five years on December 31, 2025. The data related to the loan are: Principal amount 6,000,000 Direct origination cost 92,250 Origination fee received from borrower 525,000 Indirect origination cost 100,000 The effective rate on the loan after considering the direct origination cost and origination fee received is 12%. What is the carrying amount of loans receivable on December 31, 2021?
On January 1, 2023, Pubnico Marine Ltd. sold a lobster boat to a in exchange for a five-year $1,250,000 promissory note with an annual interest rate of 8%. Interest only payments are due SEMI-ANNUALLY, on June 30 and December 31. The market rate for an equivalent loan to this customer would have been 12%*. Pubnico Marine Ltd uses IFRS, has a Dec 31 year end, and prepares adjusting entries annually. Required: a) Calculate the amount of revenue to be recorded on January 1st 2023 by Pubnico Marine Ltd. for the sale of the product. i. Calculate using the present value tables in the textbook. ii. Calculate using EXCEL “PV” formula. Copy your Excel formula to another cell as text so it can be viewed (put ‘ in front of it for text.) (Remember that the payment and the future value must be negative.) b) Prepare the journal entries for Pubnico Marine Ltd at Jan 1, 2023, June 30, 2023, and Dec 31, 2023. (Show all calculations.) c) Prepare the note amortization schedule. Be sure to show the all…
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At January 1, 2018, Brainard Industries, Inc., owed Second BancCorp $12 million under a 10% note due December 31, 2020. Interest was paid last on December 31, 2016. Brainard was experiencing severe financial difficultiesand asked Second BancCorp to modify the terms of the debt agreement. After negotiation Second BancCorpagreed to:a. Forgive the interest accrued for the year just ended.b. Reduce the remaining two years’ interest payments to $1 million each and delay the first payment untilDecember 31, 2019.c. Reduce the unpaid principal amount to $11 million.Required:Prepare the journal entries by Brainard Industries, Inc., necessitated by the restructuring of the debt at (1) January1, 2018; (2) December 31, 2019; and (3) December 31, 2020.

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