What amount should be recognized as impairment loss for 2024?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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For items 15 to 17
BDO Bank loaned P7,500,000 to a borrower on January 1, 2023. The
terms of the loan were payment in full on December 31, 2027 plus
annual interest payment at 12% beginning December 31, 2023. The
interest payment was made as scheduled on December 31, 2023.
However, due to financial setbacks, the borrower was unable to make
the December 31, 2024 interest payment.
The bank considered the loan impaired and projected the cash flows
from the loan on December 31, 2024. The bank had accrued the
interest on December 31, 2024.
Date of cash flow
December 31, 2025
December 31, 2026
December 31, 2027
December 31, 2028
Amount projected
December 31, 2023
Present value
of 1 at 12%
P500,000
One period .89
1,000,000
Two periods .80
2,000,000 Three periods.71
4,000,000 Four periods .64
What amount should be recognized as impairment loss for 2024?
Transcribed Image Text:For items 15 to 17 BDO Bank loaned P7,500,000 to a borrower on January 1, 2023. The terms of the loan were payment in full on December 31, 2027 plus annual interest payment at 12% beginning December 31, 2023. The interest payment was made as scheduled on December 31, 2023. However, due to financial setbacks, the borrower was unable to make the December 31, 2024 interest payment. The bank considered the loan impaired and projected the cash flows from the loan on December 31, 2024. The bank had accrued the interest on December 31, 2024. Date of cash flow December 31, 2025 December 31, 2026 December 31, 2027 December 31, 2028 Amount projected December 31, 2023 Present value of 1 at 12% P500,000 One period .89 1,000,000 Two periods .80 2,000,000 Three periods.71 4,000,000 Four periods .64 What amount should be recognized as impairment loss for 2024?
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