On December 31, 2019, Panda Bank recorded an investment of P5,000,000 in a loan granted to a client. The loan has a 10% effective interest rate payable annually every December 31. The principal is due in full at maturity on December 31, 2022. Unfortunately, the borrower is experiencing significant financial difficulty and will have difficult time in making full payment. The bank projected that the entire principal will be paid at maturity and 4% interest or P200,000 will be paid annually on December 31 of the next three years. There is no accrued interest on December 31, 2019. The PV of 1 at 10% for three periods is 0.75, and the PV of an ordinary annuity of 1 at 10% for three period is 2.49. What is the loan impairment loss for 2019? A. P600,000 B. P752,000 C. P250,000 D. P748,000
On December 31, 2019, Panda Bank recorded an investment of P5,000,000 in a loan granted to a client. The loan has a 10% effective interest rate payable annually every December 31. The principal is due in full at maturity on December 31, 2022. Unfortunately, the borrower is experiencing significant financial difficulty and will have difficult time in making full payment. The bank projected that the entire principal will be paid at maturity and 4% interest or P200,000 will be paid annually on December 31 of the next three years. There is no accrued interest on December 31, 2019. The PV of 1 at 10% for three periods is 0.75, and the PV of an ordinary annuity of 1 at 10% for three period is 2.49.
What is the loan impairment loss for 2019?
A. P600,000
B. P752,000
C. P250,000
D. P748,000
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