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

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