Prepare the amortization table of the loan after impairment.
DIRECTION: Prepare an amortization table
Kalibo Bank loaned P5,000,000 to Caticlan Company on January 1, 2012. The terms of the loan require principal
payments of P1,000,000 each year for 5 years plus interest at 8%. The first principal and interest payment is
due on January 1,2013. Caticlan Company made the required payments during 2013 and 2014.
However, during 2014 Caticlan Company began to experience financial difficulties, requiring Kalibo Bank to
reassess the collectibility of the loan.
On December 31,2014, Kalibo Bank has determined that the remaining principal payment will be collected but
the collection of the interest is unlikely. Kalibo Bank did not accrue the interest on December 31, 2014.
The present value of 1 at 8% is as follows:
For one period 0.926
For two periods 0.857
For three periods 0.794
Required: Prepare the amortization table of the loan after impairment.
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