FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Problem 25
Davao Bank loaned P7,500,000 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 its 2020 interest payment and Davao Bank considers the loan impaired and projects the
Date of cash flow Amount projected
as of Dec. 31, 2020
December31, 2021 500,000
December31, 2022 1,000,000
December31, 2023 2,000,000
December31, 2024 4,000,000
The present value at l2% is as follows:
For one period 0.89
For two periods 0.80
For three periods 0.71
For four periods 0.64
Required:
1.Prepare a table of amortization for the loan receivable.
2. Prepare
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