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What is the loan impairment loss on December 31,2016?

What is the loan impairment loss on December 31,2016?

FINANCIAL ACCOUNTING
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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What is the loan impairment loss on December 31,2016?

17. Kalibo Bank loaned P5,000,000 to Caticlan Company on January 1, 2014. The terms of the loan require principal payments of P1,000,000 each year for 5 years plus interest at 8%. 23 | Page SAINT COLUMBAN COLLEGE Corner V. Cerilles - Sagun Streets, San Francisco District, Pagadian City Tel Nos: 2151799 /2151800 | Fax No: 2141290 | Website: www.sccpag.edu.ph | E-mail: sccpc1957@gmail.com The first principal and interest payment is due on January 1, 2015 Caticlan Company made the required payments during 2015 and 2016. However, during 2016 Caticlan Company began to experience financial difficulties, requiring Kalibo Bank to reassess the collectibility of the loan. On December 31, 2016, 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, 2016. The present value of 1 at 8% is as follows: For one period For two periods For three periods 0.926 0.857 0.794
Transcribed Image Text:17. Kalibo Bank loaned P5,000,000 to Caticlan Company on January 1, 2014. The terms of the loan require principal payments of P1,000,000 each year for 5 years plus interest at 8%. 23 | Page SAINT COLUMBAN COLLEGE Corner V. Cerilles - Sagun Streets, San Francisco District, Pagadian City Tel Nos: 2151799 /2151800 | Fax No: 2141290 | Website: www.sccpag.edu.ph | E-mail: sccpc1957@gmail.com The first principal and interest payment is due on January 1, 2015 Caticlan Company made the required payments during 2015 and 2016. However, during 2016 Caticlan Company began to experience financial difficulties, requiring Kalibo Bank to reassess the collectibility of the loan. On December 31, 2016, 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, 2016. The present value of 1 at 8% is as follows: For one period For two periods For three periods 0.926 0.857 0.794
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