On December 31, 2021, Oregon Bank recorded an investment of P5,000,000 in aloan granted to a client. The loan has a 10% effective interest rate payableannually every December 31. The principal is due in full at maturity on December31, 2024.Unfortunately, the borrower is experiencing significant financialdifficulty and will have difficult time in making full payment.The bank projectedthat the entire principal will be paid at maturity and 4% interest or P200,000 willbe paid annually on December 31 of the next three years. There is no accruedinterest on December 31, 2021.The present value of 1 at 10% for three periods is0.75, and the present value of an ordinary annuity of 1 at 10% for three periods is2.49. What is the loan impairment loss for 2021?

Solution- PV of principal (5,000,000 x .75) =3,750,000 PV of…

On December 31, 2021, Oregon 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, 2024.Unfortunately, the borrower is experiencing significant financial difficulty and will bave difficult time in making full pavment The bank proiected

On December 31, 2021, Oregon 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, 2024.Unfortunately, the borrower is experiencing significant financial difficulty and will bave difficult time in making full pavment The bank proiected

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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