On December 31, 2017, Entity Z acquired Lumangyao Corporation's P1,000,000 notes P927,880. The market interest rate at that time was 12%. The stated interest rate was 10 payable annually. The notes mature in five years and classified as financial asset at amorti cost. At December 31, 2019, the note is considered credit impaired. Entity Z determined tha was probable that the issuer would pay back only P600,000 of the principal at maturity. December 31, 2020, because of the improvement in the credit rating of Lumangyao, Entit reassessed the collectibility of the note and now expects to collect P900,000 from Lumangy

On December 31, 2017, Entity Z acquired Lumangyao Corporation's P1,000,000 notes P927,880. The market interest rate at that time was 12%. The stated interest rate was 10 payable annually. The notes mature in five years and classified as financial asset at amorti cost. At December 31, 2019, the note is considered credit impaired. Entity Z determined tha was probable that the issuer would pay back only P600,000 of the principal at maturity. December 31, 2020, because of the improvement in the credit rating of Lumangyao, Entit reassessed the collectibility of the note and now expects to collect P900,000 from Lumangy

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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