On December 31, 2016, Agro Company agreed to the following modification of its existing liability: a. Reduced the principal on the loan of P5,000,000 to P4,000,000 b. Extended the maturity date from December 31, 2017 to December 31, 2019. c. Reduced the loan's nominal interest rate of 12% to 10%. d. Fees incurred directly attributable to the restructuring totaled P50,000 Interest is payable annually at each year-end. The original effective interest rate of the debt instrument is 12%. Prepare all the necessary journal entries for the December 31, 2016 and for the year 2017. Show your solutions.

On December 31, 2016, Agro Company agreed to the following modification of its existing liability: a. Reduced the principal on the loan of P5,000,000 to P4,000,000 b. Extended the maturity date from December 31, 2017 to December 31, 2019. c. Reduced the loan's nominal interest rate of 12% to 10%. d. Fees incurred directly attributable to the restructuring totaled P50,000 Interest is payable annually at each year-end. The original effective interest rate of the debt instrument is 12%. Prepare all the necessary journal entries for the December 31, 2016 and for the year 2017. Show your solutions.

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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