On January 1, 2020, Oceanic Bank made a P1,000,00ó 8% loan. The P80,000 interest is receivable at the end of each year, with the principal amount to be received at the end of five years. At the end of 2020, the first year's interest of P80,000 has not ye been received because the borrower is experiencing financial difficulties. The borrower negotiate a restructuring of the loan. The payment of all the interest for 5 years will be delayed until the end of the 5-year loan term. In addition, the amount of principal repayment will be dropped from P1,000,000 to P500,000. The PV of 1 at 8% for 4 periods is .735. No interest revenue has been recognized in 2020 in connection with the loan. What amount should be reported as interest income for 2021? * a.80,000 b.52,920 c.48,960 d.0
On January 1, 2020, Oceanic Bank made a P1,000,00ó 8% loan. The P80,000 interest is receivable at the end of each year, with the principal amount to be received at the end of five years. At the end of 2020, the first year's interest of P80,000 has not ye been received because the borrower is experiencing financial difficulties. The borrower negotiate a restructuring of the loan. The payment of all the interest for 5 years will be delayed until the end of the 5-year loan term. In addition, the amount of principal repayment will be dropped from P1,000,000 to P500,000. The PV of 1 at 8% for 4 periods is .735. No interest revenue has been recognized in 2020 in connection with the loan. What amount should be reported as interest income for 2021? * a.80,000 b.52,920 c.48,960 d.0
Chapter5: Introduction To Business Expenses
Section: Chapter Questions
Problem 61P
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Question
![On January 1, 2020, Oceanic Bank made a
P1,000,000 8% loan. The P80,000 interest is
receivable at the end of each year, with the
principal amount to be received at the end of
five years. At the end of 2020, the first year's
interest of P80,000 has not ye been received
because the borrower is experiencing
financial difficulties. The borrower negotiate a
restructuring of the loan. The payment of all
the interest for 5 years will be delayed until
the end of the 5-year loan term. In addition,
the amount of principal repayment will be
dropped from P1,000,000 to P500,000. The
PV of 1 at 8% for 4 periods is .735. No interest
revenue has been recognized in 2020 in
connection with the loan. What amount
should be reported as interest income for
2021? *
a.80,000
b.52,920
c.48,960
d.0](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8bec4f99-882d-4012-b17b-c76034ea8d23%2F94072091-4dd9-46fc-837a-e031d123bdb8%2F1zrx0xk_processed.jpeg&w=3840&q=75)
Transcribed Image Text:On January 1, 2020, Oceanic Bank made a
P1,000,000 8% loan. The P80,000 interest is
receivable at the end of each year, with the
principal amount to be received at the end of
five years. At the end of 2020, the first year's
interest of P80,000 has not ye been received
because the borrower is experiencing
financial difficulties. The borrower negotiate a
restructuring of the loan. The payment of all
the interest for 5 years will be delayed until
the end of the 5-year loan term. In addition,
the amount of principal repayment will be
dropped from P1,000,000 to P500,000. The
PV of 1 at 8% for 4 periods is .735. No interest
revenue has been recognized in 2020 in
connection with the loan. What amount
should be reported as interest income for
2021? *
a.80,000
b.52,920
c.48,960
d.0
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