Kalibo Bank loaned P5,000,000 to Caticlan Company on January 1, 2021. The terms of the loan require principal payments of P 1,000,000 each year for 5 years plus interest at 8%.The first principal and interest payment is due on January 1, 2021. Caticlan Company made the required payments during 2022 and 2023.However, during 2023 Caticlan Company began to experience financial difficulties, requiring the Kalibo bank to reassess the collectibility of the loan.On December 31, 2020, the Kalibo bank has determined that the remaining principal payment will be collected as originally scheduled but the collection of the interest is unlikely. Kalibo Bank did not accrue the interest on Dec. 21, 2023.Present value of 1 at 8%:For one period 0.93For two periods 0.86For three periods 0.79 3. What is the carrying amount of the loan receivable on December 31, 2024? payments ofP1,000,000 each year for 5 years plus interestKalibo Bank loaned P5,000,000 to Caticlan Company onProblem 7-12 (IAA)fanuary 1, 2021. The terms of the loan require principalat 8%.The first principal and interest payment is due on January2022. Caticlan Company made the required paymentsduring 2022 and 2023.However, during 2023 Caticlan Company began toexperience financial difficulties, requiring Kalibo Bank toreassess the collectibility of the loan.On December 31, 2023, Kalibo Bank has determined that theremaining principal payment will be collected but thecollection of the interest is unlikely. Kalibo Bank did notaccrue the interest on December 31, 2023.The present value of 1 at 8%:For one periodFor two periodsFor three periods0.930.860.793. What is the carrying amount of the loan receivable onDecember 31, 2024?a. 2,000,000b. 1,933,200c. 1,590,000d. 1,790,000

A loan refers to the amount that is borrowed by an individual or the company from a bank or any…

Answered: Kalibo Bank loaned P5,000,000 to…

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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Kalibo Bank loaned P5,000,000 to Caticlan Company on January 1, 2021. The terms of the loan require principal payments of P 1,000,000 each year for 5 years plus interest at 8%.

The first principal and interest payment is due on January 1, 2021. Caticlan Company made the required payments during 2022 and 2023.

However, during 2023 Caticlan Company began to experience financial difficulties, requiring the Kalibo bank to reassess the collectibility of the loan.

On December 31, 2020, the Kalibo bank has determined that the remaining principal payment will be collected as originally scheduled but the collection of the interest is unlikely. Kalibo Bank did not accrue the interest on Dec. 21, 2023.

Present value of 1 at 8%:
For one period 0.93
For two periods 0.86

For three periods 0.79

3. What is the carrying amount of the loan receivable on December 31, 2024?

payments ofP1,000,000 each year for 5 years plus interest
Kalibo Bank loaned P5,000,000 to Caticlan Company on
Problem 7-12 (IAA)
fanuary 1, 2021. The terms of the loan require principal
at 8%.
The first principal and interest payment is due on January
2022. Caticlan Company made the required payments
during 2022 and 2023.
However, during 2023 Caticlan Company began to
experience financial difficulties, requiring Kalibo Bank to
reassess the collectibility of the loan.
On December 31, 2023, Kalibo Bank has determined that the
remaining principal payment will be collected but the
collection of the interest is unlikely. Kalibo Bank did not
accrue the interest on December 31, 2023.
The present value of 1 at 8%:
For one period
For two periods
For three periods
0.93
0.86
0.79
3. What is the carrying amount of the loan receivable on
December 31, 2024?
a. 2,000,000
b. 1,933,200
c. 1,590,000
d. 1,790,000

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