Jem Riane Delos Reyes Bank granted a loan of P3,000,000 to a borrower on January 1, 2021. The terms of the loan were payment in full on December 31, 2026 plus annual interest payment at 8% every December 31. The first interest payment was made on December 31, 2021. However, on December 31, 2021, due to financial difficulties, the borrower informed Freetown Bank that it would probably miss the interest payments for the next two years. After that, the borrower expects to resume the annual interest payment but the principal would be paid on December 31, 2027 or ane year late with interest paid for that additional year. Accordingly, the payments from the borrower are scheduled as follows: Amount 12/31/2022 No interest payment Nil 12/31/2023 No interest payment Nil P 240,000 240,000 240,000 240,000 3,000,000 Date of Flow Cash Flow 12/31/2024 Interest payment 12/31/2025 Interest payment 12/31/2026 Interest payment 12/31/2027 Interest payment Principal payment

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Jem Riane Delos Reyes Bank granted a loan of P3,000,000 to a borrower on January 1, 2021.
The terms of the loan were payment in full on December 31, 2026 plus annual interest payment
at 8% every December 31. The first interest payment was made on December 31, 2021.
However, on December 31, 2021, due to financial difficulties, the borrower informed Freetown
Bank that it would probably miss the interest payments for the next two years. After that, the
borrower expects to resume the annual interest payment but the principal would be paid on
December 31, 2027 or one year late with interest paid for that additional year. Accordingly, the
payments from the borrower are scheduled as follows:
Date of Flow Cash Flow
Amount
12/31/2022 No interest payment Nil
12/31/2023 No interest payment Nil
12/31/2024 Interest payment
12/31/2025 Interest payment
12/31/2026 Interest payment
12/31/2027 Interest payment
P 240,000
240,000
240,000
240,000
3,000,000
Principal payment
34. The carrying amount of the loan receivable at December 31, 2022 is:
35. The interest income to be recognized in 2024 is:
Transcribed Image Text:Jem Riane Delos Reyes Bank granted a loan of P3,000,000 to a borrower on January 1, 2021. The terms of the loan were payment in full on December 31, 2026 plus annual interest payment at 8% every December 31. The first interest payment was made on December 31, 2021. However, on December 31, 2021, due to financial difficulties, the borrower informed Freetown Bank that it would probably miss the interest payments for the next two years. After that, the borrower expects to resume the annual interest payment but the principal would be paid on December 31, 2027 or one year late with interest paid for that additional year. Accordingly, the payments from the borrower are scheduled as follows: Date of Flow Cash Flow Amount 12/31/2022 No interest payment Nil 12/31/2023 No interest payment Nil 12/31/2024 Interest payment 12/31/2025 Interest payment 12/31/2026 Interest payment 12/31/2027 Interest payment P 240,000 240,000 240,000 240,000 3,000,000 Principal payment 34. The carrying amount of the loan receivable at December 31, 2022 is: 35. The interest income to be recognized in 2024 is:
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