On January 1, 2021, Mara Company entered into a debt restructuring agreement with Clara Company which was experiencing financial difficulties. Mara restructured a P1,000,000 note receivable as follows: A.Reduced the principal obligation to P700, 000. B.Forgave P120, 000 of accrued interest. C.Extended the maturity date from January 1, 2021 to December 31, 2022. D.Reduced the interest rate from 12% to 8%. Interest is payable annually on December 31, 2021 and 2022. 1.What is the interest income for 2022? 2.What is the impairment loss on the note receivable for 2021?
On January 1, 2021, Mara Company entered into a debt restructuring agreement with Clara Company which was experiencing financial difficulties. Mara restructured a P1,000,000 note receivable as follows: A.Reduced the principal obligation to P700, 000. B.Forgave P120, 000 of accrued interest. C.Extended the maturity date from January 1, 2021 to December 31, 2022. D.Reduced the interest rate from 12% to 8%. Interest is payable annually on December 31, 2021 and 2022. 1.What is the interest income for 2022? 2.What is the impairment loss on the note receivable for 2021?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2021, Mara Company entered into a debt restructuring agreement with Clara Company which was experiencing financial difficulties. Mara restructured a P1,000,000 note receivable as follows:
A.Reduced the principal obligation to P700, 000.
B.Forgave P120, 000 of accrued interest.
C.Extended the maturity date from January 1, 2021 to December 31, 2022.
D.Reduced the interest rate from 12% to 8%. Interest is payable annually on December 31, 2021 and 2022.
A.Reduced the principal obligation to P700, 000.
B.Forgave P120, 000 of accrued interest.
C.Extended the maturity date from January 1, 2021 to December 31, 2022.
D.Reduced the interest rate from 12% to 8%. Interest is payable annually on December 31, 2021 and 2022.
1.What is the interest income for 2022?
2.What is the impairment loss on the note receivable for 2021?
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