How much is the impairment loss to be recorded on December 31, 2022? How much is the carrying amount on the loan as of December 31, 2024?
Groudon Bank loaned P12,000,000 to Kyogre Company on January 1, 2020, the terms of the loan require principal payments of P2,000,000 each year for 6 years plus interest at 6%. The first principal and interest payment is due on December 31, 2020. Kyogre made the required payments on December 31, 2020, and December 31, 2021. However, Kyogre began to experience financial difficulties during 2022 which requires the bank to reassess the collectibility of the loan. On December 31, 2022, the bank determined that the remaining principal payments will be collected but the collection of the interest is unlikely. The bank did not accrue the interest for 2022.
| Expected Principal Payments | |
| December 31, 2024 | P4,000,000 |
| December 31, 2025 | 2,500,000 |
| December 31, 2026 | 1,500,000 |
Note: Round off present value factors up to four decimal points; round off the final value up to two decimal points.
E.g., 0.7812 and 123,518.25
Questions:
- How much is the impairment loss to be recorded on December 31, 2022?
- How much is the carrying amount on the loan as of December 31, 2024?
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