On Dec. 31, 20x1, Tissue Co. determines that its loan receivable from Breakfast Co. with a carrying amount of P5,600,000 is impaired. Tissue Co. restructures the loan reducing it to P4,200,000. The restructured loan is payable in three equal annual payments starting on Jan. 1, 20x2. All future interest are waived. The effective interest rate applied on the loan on its initial recognition is 12%. The current market rate on Dec. 31, 20x1 is 10%. How much are the impairment loss in 20x1 and the interest income in 20x2 respectively?
On Dec. 31, 20x1, Tissue Co. determines that its loan receivable from Breakfast Co. with a carrying amount of P5,600,000 is impaired. Tissue Co. restructures the loan reducing it to P4,200,000. The restructured loan is payable in three equal annual payments starting on Jan. 1, 20x2. All future interest are waived. The effective interest rate applied on the loan on its initial recognition is 12%. The current market rate on Dec. 31, 20x1 is 10%. How much are the impairment loss in 20x1 and the interest income in 20x2 respectively?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On Dec. 31, 20x1, Tissue Co. determines that its loan receivable
from Breakfast Co. with a carrying amount of P5,600,000 is impaired. Tissue Co. restructures the loan reducing it to P4,200,000. The restructured loan is payable in three equal annual payments starting on Jan. 1, 20x2. All future interest are waived. The effective interest rate applied on the loan on its initial recognition is 12%. The current market rate on Dec. 31, 20x1 is 10%. How much are the impairment loss in 20x1 and the interest income in 20x2 respectively?
a. 1,833,929 and 451,929
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