Problem (IAA) Global Bank loaned P9,000,000 to a borrower on January 1, 2018. The terms of the loan were payment in full on January 1. 2023, plus annual interest payment at 12%. The interest payment was made as scheduled on January 1, 2019. However, due to financial setbacks, the borrower was unable to make the 2020 interest payment. The bank considered the loan impaired and projected the cash flows from the loan on December 31, 2020. The bank has accrued the interest on December 31, 2019, but did not continue to accrue interest for 2020 due to the impairment of the loan. The projected cash flows are: Amount projected on December 31, 2020 Date of cash flow December 31, 2021 December 31, 2022 December 31, 2023 December 31, 2024 1,500,000 2,000,000 2,500,000 3,000,000 The present value of 1 at 12% is .89 for one period, .80 for two periods, .71 for three periods, and .64 for four periods. 1. What is the loan impairment loss for 2020? a. 2,370,000 b. 3,450,000

Problem (IAA) Global Bank loaned P9,000,000 to a borrower on January 1, 2018. The terms of the loan were payment in full on January 1. 2023, plus annual interest payment at 12%. The interest payment was made as scheduled on January 1, 2019. However, due to financial setbacks, the borrower was unable to make the 2020 interest payment. The bank considered the loan impaired and projected the cash flows from the loan on December 31, 2020. The bank has accrued the interest on December 31, 2019, but did not continue to accrue interest for 2020 due to the impairment of the loan. The projected cash flows are: Amount projected on December 31, 2020 Date of cash flow December 31, 2021 December 31, 2022 December 31, 2023 December 31, 2024 1,500,000 2,000,000 2,500,000 3,000,000 The present value of 1 at 12% is .89 for one period, .80 for two periods, .71 for three periods, and .64 for four periods. 1. What is the loan impairment loss for 2020? a. 2,370,000 b. 3,450,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Required: Round interim calculations to four decimals and final answers to the nearest dollar.…

A: Present Value-Present value is the concept that states that an amount of money today is worth more…

Q: 3.1 Prepare the journal entry to record the transaction of December 31, 2019, for Halen company. 3.2…

A: Discount on notes receivable The present value of the payments to be received from a note receivable…

Q: On January 1, 2020, Flounder Furniture Ltd. borrowed $3 million (face value) from Aurora Inc., a…

A: Notes are the financial instruments which are quite similar to bond as they have maturity period and…

Q: Yolo Corporation experienced financial difficulty in 2020. It decided to go into note receivable…

A: Journal Entries- Journal entries are the visual representation of business transactions. A general…

Q: (Cost of short-term bank loan) On July 1, 2018, the Southwest Forging Corporation arranged for a…

A: The effective cost of credit under the line-of-credit agreement, when the maximum loan amount is…

Q: What is the forecasted interest expense on Comfy Homes 2018 pro forma financial statements? When the…

A: Here's a detailed calculation for better understanding. To forecast the interest expense for Comfy…

Q: On January 1, 2020, Flounder Furniture Ltd. borrowed $3 million (face value) from Aurora Inc., a…

A: In finance, the term promissory note represents a written document in which one person promises to…

Q: On December 31, 2017, Firth Company borrowed $62,092 from Paris Bank, signing a 5-year, $100,000…

A: (a) Prepare the entry (if any) to record the impairment of the loan on December 31, 2019, by Paris…

Q: loan of 15700 was charged a simple discount rate of 4.2%. If the proceeds received were 15463.72,…

A: find the amount of bank discount.:: Bank discount=Proceeds -Maturity value=$15463.72-$15700=238.28$…

Q: On December 31, 2025, Sunland Co. performed environmental consulting services for Hayduke Co.…

A: An interest-bearing note is a financial instrument, typically a promissory note, that requires the…

Q: On April 1, 2021, the Electronic Superstore borrows $21 million of which $7 million is due in 2022.…

Q: On December 31, 2020, Monty Co. performed environmental consulting services for Hayduke Co. Hayduke…

A: A journal entry is a financial record kept by a company or individual to record a specific financial…

Q: On December 31, 2020, Larkspur Co. performed environmental consulting services for Hayduke Co.…

A: Service revenue = Face value of Notes receivable x Present value factor (10%, 2 years) = $252,100 x…

Q: Durango, Inc. borrowed $20,000 on October 1, 2020. Durango will not make any payments on this loan…

A: Total interest for 3 years = Amount owe at the end - amount borrowed = $26000 - 20000 = $6000…

Question

2018. The terms of the loan were payment in full on January
3. What is the carrying amount of the loan receivable on
Problem 7-11 (IAA)
Global Bank loaned P9,000,000 to a borrower on January 1,
2018. The terms of the loan were payment in full on January
1. 2023, plus annual interest payment at 12%.
The interest payment was made as scheduled on January 1,
2019. However, due to financial setbacks, the borrower was
unable to make the 2020 interest payment.
The bank considered the loan impaired and projected the
cash flows from the loan on December 31, 2020.
The bank has accrued the interest on December 31, 2019, but
did not continue to accrue interest for 2020 due to the
impairment of the loan. The projected cash flows are:
Amount projected
on December 31, 2020
Date of cash flow
December 31, 2021
December 31, 2022
December 31, 2023
December 31, 2024
1,500,000
2,000,000
2,500,000
3,000,000
The present value of 1 at 12% is .89 for one period, .80 for
two periods, .71 for three periods, and .64 for four periods.
1. What is the loan impairment loss for 2020?
a. 2,370,000
b. 3,450,000
c. 6,630,000
d. 2,450,000
2. What is the interest income for 2021?
795,600
900,000
180,000
0.
a.
b.
с.
d.
3. What is the carrying amount of the loan receivable on
December 31, 2021?
a. 5,925,600
b. 4,845,600
c. 6,330,000
d. 7,500,000
217

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Dog
On December 31, 2020, Sarasota Co. performed environmental consulting services for Hayduke Co. Hayduke was short of cash, and Sarasota Co. agreed to accept a $337,600 zero-interest-bearing note due December 31, 2022, as payment in full. Hayduke is somewhat of a credit risk and typically borrows funds at a rate of 11%. Sarasota is much more creditworthy and has various lines of credit at 5%. Click here to view factor table. (a) Your answer is partially correct. Prepare the journal entry to record the transaction of December 31, 2020, for the Sarasota Co. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Dec. 31, 2020 Account Titles and Explanation Notes Receivable Service Revenue Discount on Notes Receivable Debit…
Current Attempt in Progress Riverbed Corp. was experiencing cash flow problems and was unable to pay its $104,000 account payable to Martinez Corp. when it fell due on September 30, 2023. Martinez agreed to substitute a one-year note for the open account. The following two options were presented to Riverbed by Martinez: Option 1: A one-year note for $104,000 due September 30, 2024. Interest at a rate of 9% would be payable at maturity. Option 2: A one-year non-interest-bearing note for $113,360. The implied rate of interest is 9%. Assume that Martinez has a December 31 year end.
A loan of $10,000 is taken out on November 7, 2020 at a simple interest rate of r = 9%. The loan will be paid back on May 11, 2021. If the bank uses ordinary interest (the Banker's Rule), how much interest is charged? a $450.00 b $456.16 c $443.84 d $462.50
Acc
What is the forecasted current portion of bank loan on comfy homes 2018 pro forma financial statements. The $45000 current portion of the bank loan will be paid in December 31, 2018. Of the $255000 in long term debt, another $45000 comes due on December 31, 2019. Comfy home does not plan to obtain any additional loans in 2018. The interest rate for comfy homes borrowing has declined to 6%. It is expected to be the average rate of interest for comfy home short and long term borrowings in 2018. Revenues believe to increase 30% in 2018.