Problem 25Davao Bank loaned P7,500,000 to a borrower on January 1, 2018. The terms of the loan werepayment in full on January 1, 2023, plus annual interest payment at 12%. The interest paymentwas made as scheduled on January 1, 2019. However, due to financial setbacks, the borrowerwas unable to make its 2020 interest payment and Davao Bank considers the loan impaired andprojects the cash flows from the loan as of December 31, 2020. The bank has accrued theinterest at December 31, 2019, but did not continue to accrue interest for 2020 due to theimpairment of the loan. The projected cash flows are:Amount projectedas of Dec. 31, 2020500,0001,000,0002,000,0004,000,000Date of cash flowDecember31, 2021December31, 2022December31, 2023December31, 2024The present value at 12% is as follows:For one period0.89For two periodsFor three periodsFor four periods0.800.710.64Required:1.Compute the impairment loss of the loan receivable on December 31,2020.2.Prepare a table of amortization for the loan receivable.3. Prepare journal entries for 2018 – 2024.

Loan Amount = P7,500,000 Interest Rate = 12% Accrued Interest = 12% of P7,500,000 = P900,000…

Problem 25 Davao Bank loaned P7,500,000 to a borrower on January 1, 2018. The terms of the payment in full on January 1, 2023, plus annual interest payment at 12%. The intere was made as scheduled on January 1, 2019. However, due to financial setbacks, the was unable to make its 2020 interest payment and Davao Bank considers the loan im projects the cash flows from the loan as of December 31, 2020. The bank has a interest at December 31, 2019, but did not continue to accrue interest for 2020 impairment of the loan. The projected cash flows are: Date of cash flow December31, 2021 December31, 2022 Amount projected as of Dec. 31, 2020 500,000 1,000,000

Problem 25 Davao Bank loaned P7,500,000 to a borrower on January 1, 2018. The terms of the payment in full on January 1, 2023, plus annual interest payment at 12%. The intere was made as scheduled on January 1, 2019. However, due to financial setbacks, the was unable to make its 2020 interest payment and Davao Bank considers the loan im projects the cash flows from the loan as of December 31, 2020. The bank has a interest at December 31, 2019, but did not continue to accrue interest for 2020 impairment of the loan. The projected cash flows are: Date of cash flow December31, 2021 December31, 2022 Amount projected as of Dec. 31, 2020 500,000 1,000,000

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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