On December 31, 2021, London Bank granted P5,000,000 loan to a borrower with 10% atated rate payable annually ind maturing in 5 years. The loan was discounted at the market interest rate of 12%. Unfortunately, the financial condition of the borrower worsened because of lower revenue. I. On December 31, 2023, the bank determined that the borrower would pay back only P3,000,000 of the principal at maturity. However, it was considered likely that interest would continue to be paid on the P5,000,000 loan. The present value of 1 at 12% is .67 for five periods and ,71 for three periods. The present value of an ordinary annuity of 1 at 12% is 3.60 for five periods and 2.40 for three periode. 1. What is the amount of cash paid to the borrower on December 31, 2021? & 4,400,000 b. 4,500,000 c. 5,000,000 d. 4,650,000
On December 31, 2021, London Bank granted P5,000,000 loan to a borrower with 10% atated rate payable annually ind maturing in 5 years. The loan was discounted at the market interest rate of 12%. Unfortunately, the financial condition of the borrower worsened because of lower revenue. I. On December 31, 2023, the bank determined that the borrower would pay back only P3,000,000 of the principal at maturity. However, it was considered likely that interest would continue to be paid on the P5,000,000 loan. The present value of 1 at 12% is .67 for five periods and ,71 for three periods. The present value of an ordinary annuity of 1 at 12% is 3.60 for five periods and 2.40 for three periode. 1. What is the amount of cash paid to the borrower on December 31, 2021? & 4,400,000 b. 4,500,000 c. 5,000,000 d. 4,650,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Problem 7-16 (IAA)
On December 31, 2021, London Bank granted P5,000,000
loan to a borrower with 10% atated rate payable annually
and maturing in 5 years. The loan was discounted at the
market interest rate of 12%.
Unfortunately, the financial oondition of the borrower
worsened because of lower revenue.
On December 31, 2023, the bank determined that the
borrower would pay back only P3,000,000 of the principal at
maturity.
However, it was considered likely that interest would
continue to be paid on the P5,000,000 loan.
The present value of 1 at 12% is .67 for five periods and ,71
for three periods.
The present value of an ordinary annuity of 1 at 12% is 3.60
for five periods and 2.40 for three periode.
1. What is the amount of cash paid to the borrower on
December 31, 2021?
a 4,400,000
b. 4,500,000
c. 5,000,000
d. 4,650,000
Transcribed Image Text:2. What is the carrying amount of the loan receivable on
December 81, 2023?
a. 4,650,000
b. 4,790,000
c. 4,772,960
d. 4,720,000
3. What amount should be reported as impairment loss on
loan receivable for 2023?
a 2,000,000
b. 1,442,960
c. 1,922,960
d. 1,670,000
230
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