On January 1,2018, Ronaldo Co. Received a ₱1,000,000 note receivable from Quirante Inc. Principal payments of ₱200,000 and interest at 10% are due annually at the end of each year for 5 years. The first payment starts on December 31,2018. Quirante, Inc. made the required payments during 2018 and 2019. However, during 2020, Quirante Inc. Began to experience financial difficulties, requiring Ronaldo Co. to reassess the collectability of the note. Interest was accrued in impaired and projects that only the remaining principal is collectible. The expected future cash flows are as follows: Expected date of collection Amount of cash flow December 31,2021 ₱140,000 December 31,2022 200,000 December 31,2023 260,000 The amount of impairment loss in 2020 based on these cash flows was ₱212,108. On December 31,2021, Quirante’s credit rating has improved and the loan was then again restructured. After receiving the scheduled collection on December 31,2021, the present value of the remaining cash flows on the newly restructured loan is ₱654,552. Immediately before the restructuring on December 31,2021, the loan has a carrying amount of ₱396,681. If no impairment loss had been recognized previously, the loan would have carrying amount ₱600,000 as December 31,2021. Based on the above data, answer the following: 1. How much is the gain on reversal of impairment to be recognized in 2021? a. ₱203,319 c. ₱212,108 b. ₱254,552 d. ₱257,871 2. How much is the interest income for 2022? a. ₱65,455 c. ₱39,668 b. ₱60,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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On January 1,2018, Ronaldo Co. Received a ₱1,000,000 note receivable from Quirante Inc. Principal payments of ₱200,000 and interest at 10% are due annually at the end of each year for 5 years. The first payment starts on December 31,2018. Quirante, Inc. made the required payments during 2018 and 2019. However, during 2020, Quirante Inc. Began to experience financial difficulties, requiring Ronaldo Co. to reassess the collectability of the note. Interest was accrued in impaired and projects that only the remaining principal is collectible. The expected future cash flows are as follows: Expected date of collection Amount of cash flow December 31,2021 ₱140,000 December 31,2022 200,000 December 31,2023 260,000 The amount of impairment loss in 2020 based on these cash flows was ₱212,108. On December 31,2021, Quirante’s credit rating has improved and the loan was then again restructured. After receiving the scheduled collection on December 31,2021, the present value of the remaining cash flows on the newly restructured loan is ₱654,552. Immediately before the restructuring on December 31,2021, the loan has a carrying amount of ₱396,681. If no impairment loss had been recognized previously, the loan would have carrying amount ₱600,000 as December 31,2021. Based on the above data, answer the following: 1. How much is the gain on reversal of impairment to be recognized in 2021? a. ₱203,319 c. ₱212,108 b. ₱254,552 d. ₱257,871 2. How much is the interest income for 2022? a. ₱65,455 c. ₱39,668 b. ₱60,000 d. ₱23,635

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