For items 11 to 12LYR Finance Company reports a loan receivable from Choice Companyin the amount of P7,500,000. The initial loan's repayments include a10% interest rate plus annual principal payment of P1,500,000 onJanuary 1 of each year. The loan was made on January 1, 2021.Choice made the P750,000 interest payments for 2021 but did notmake the P1,500,000 principal payment nor the P500,000 interestpayment in 2022. Choice is having financial difficulty and LYR hasconcluded that the loan is impaired. Analysis of Choice's financialcondition on December 31, 2022 indicates that the principal andinterest currently due can be collected but it is probable that nofurther interest can be collected. The probable amounts and timingcollection are determined as follows:December 31, 2023December 31, 2024December 31, 2025TotalP2,140,0003,400,0002,950,000P8,490,000The present value factors at 10% are as follows:1 period - 0.909; 2 periods 0.826; 3 periods - 0.751How much is the impairment loss on the receivables?-

The impairment loss on the receivables is the loss occurred whenever there is a greater value of…

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How much is the impairment loss on the receivables?

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

Similar questions

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