Green Bank loaned P9,000,000 to a borrower on January 1, 2018. The terms of the loan were payment in full on January 1, 2023, plus annual interest payment at 12%. The interest payment was made as scheduled on January 1, 2019. However, due to financial setbacks, the borrower was unable to make the 2020 interest payment. The bank considered the loan impaired and projected the cash flows from the loan on December 31, 2020. The bank has accrued the interest on December 31, 2019, but did not continue to accrue interest for 2020 due to the impairment of the loan. The projected cash flows are: Amount Projected on December 31, 2020 1,500,000 2,000,000 Date of Cash flow December 31, 2022 December 31, 2023 December 31, 2024 2,500,000 December 31, 2025 3,000,000 The present value of 1 at 12% is .89 for one period; .80 for two periods; .71 for three periods; .64 for four periods; and .57 for five periods. Q. What is the carrying value of the loan receivables to be presented in the statement of financial position as of December 31, 2020?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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2-3
Loans Receivables
Green Bank loaned P9,000,000 to a borrower on January 1, 2018.
The terms of the loan were payment in full on January 1, 2023,
plus annual interest payment at 12%. The interest payment was
made as scheduled on January 1, 2019. However, due to
financial setbacks, the borrower was unable to make the 2020
interest payment. The bank considered the loan impaired and
projected the cash flows from the loan on December 31, 2020.
The bank has accrued the interest on December 31, 2019, but
did not continue to accrue interest for 2020 due to the
impairment of the loan. The projected cash flows are:
Amount Projected on
December 31, 2020
1,500,000
Date of Cash flow
December 31, 2022
December 31, 2023
2,000,000
December 31, 2024
2,500,000
December 31, 2025
3,000,000
The present value of 1 at 12% is .89 for one period; .80 for two
periods; .71 for three periods; .64 for four periods; and .57 for
five periods.
Q. What is the carrying value of the loan receivables to be
presented in the statement of financial position as of
December 31, 2020?
Transcribed Image Text:2-3 Loans Receivables Green Bank loaned P9,000,000 to a borrower on January 1, 2018. The terms of the loan were payment in full on January 1, 2023, plus annual interest payment at 12%. The interest payment was made as scheduled on January 1, 2019. However, due to financial setbacks, the borrower was unable to make the 2020 interest payment. The bank considered the loan impaired and projected the cash flows from the loan on December 31, 2020. The bank has accrued the interest on December 31, 2019, but did not continue to accrue interest for 2020 due to the impairment of the loan. The projected cash flows are: Amount Projected on December 31, 2020 1,500,000 Date of Cash flow December 31, 2022 December 31, 2023 2,000,000 December 31, 2024 2,500,000 December 31, 2025 3,000,000 The present value of 1 at 12% is .89 for one period; .80 for two periods; .71 for three periods; .64 for four periods; and .57 for five periods. Q. What is the carrying value of the loan receivables to be presented in the statement of financial position as of December 31, 2020?
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