Homework Help is Here – Start Your Trial Now!
Business
Accounting
How much is the impairment loss on the receivables?

How much is the impairment loss on the receivables?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question
For items 11 to 12 LYR Finance Company reports a loan receivable from Choice Company in the amount of P7,500,000. The initial loan's repayments include a 10% interest rate plus annual principal payment of P1,500,000 on January 1 of each year. The loan was made on January 1, 2021. Choice made the P750,000 interest payments for 2021 but did not make the P1,500,000 principal payment nor the P500,000 interest payment in 2022. Choice is having financial difficulty and LYR has concluded that the loan is impaired. Analysis of Choice's financial condition on December 31, 2022 indicates that the principal and interest currently due can be collected but it is probable that no further interest can be collected. The probable amounts and timing collection are determined as follows: December 31, 2023 December 31, 2024 December 31, 2025 Total P2,140,000 3,400,000 2,950,000 P8,490,000 The present value factors at 10% are as follows: 1 period - 0.909; 2 periods 0.826; 3 periods - 0.751 How much is the impairment loss on the receivables? -
Transcribed Image Text:For items 11 to 12 LYR Finance Company reports a loan receivable from Choice Company in the amount of P7,500,000. The initial loan's repayments include a 10% interest rate plus annual principal payment of P1,500,000 on January 1 of each year. The loan was made on January 1, 2021. Choice made the P750,000 interest payments for 2021 but did not make the P1,500,000 principal payment nor the P500,000 interest payment in 2022. Choice is having financial difficulty and LYR has concluded that the loan is impaired. Analysis of Choice's financial condition on December 31, 2022 indicates that the principal and interest currently due can be collected but it is probable that no further interest can be collected. The probable amounts and timing collection are determined as follows: December 31, 2023 December 31, 2024 December 31, 2025 Total P2,140,000 3,400,000 2,950,000 P8,490,000 The present value factors at 10% are as follows: 1 period - 0.909; 2 periods 0.826; 3 periods - 0.751 How much is the impairment loss on the receivables? -
Expert Solution
steps

Step by step

Solved in 3 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Accounting for Impairment of Assets
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS