National Bank loaned 5,000,000 to Bank net company on Jan. 1, 2018. The terms of the loan require principal payment of 1,000,000 each year for 5 years plus interest at 10%. The first principal and interest payment is due on Dec. 31, 2018. National Bank made the required payments on Dec. 31, 2018 and Dec. 31, 2019. However during 2020, Bank net began to experience financial difficulties and was unable to make the required principal and interest payment on Dec. 31, 2020. National bank projected the cash flows from the loan as of Dec. 31, 2020 as follows: Dec. 31, 2021, 500,000, Dec. 31, 2022, 1,000,000 and Dec. 31, 2023 1,500,000. At 10% PV factors are .9091 for one period, .8264 for two periods, and .7513 for three periods. What is the entry to recognize the impairment loss?
Problem 23
National Bank loaned 5,000,000 to Bank net company on Jan. 1, 2018. The terms of the loan
require principal payment of 1,000,000 each year for 5 years plus interest at 10%. The first
principal and interest payment is due on Dec. 31, 2018. National Bank made the required
payments on Dec. 31, 2018 and Dec. 31, 2019. However during 2020, Bank net began to
experience financial difficulties and was unable to make the required principal and interest payment on Dec. 31, 2020. National bank projected the
1,500,000. At 10% PV factors are .9091 for one period, .8264 for two periods, and .7513 for three periods. What is the entry to recognize the impairment loss?
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