On December 31, 2021, The Essence Finance Company had P5,000,000 note receivable from Galena Company. The note bears 10% interest. The books reported accrued interest of P500,000 on this date. Because of financial distress being suffered by Galena Company, Essence Finance agreed to the restructuring and modification of the terms of its loan as follows: reduction of principal to P4,000,000; reduction of interest to 8% payable annually beginning Dec 31, 2022; accrued interest on December 31, 2021 is condoned and the principal payment was reset to December 31, 2024. How much is impairment loss should Essence Finance record on December 31, 2021?

On December 31, 2021, The Essence Finance Company had P5,000,000 note receivable from Galena Company. The note bears 10% interest. The books reported accrued interest of P500,000 on this date. Because of financial distress being suffered by Galena Company, Essence Finance agreed to the restructuring and modification of the terms of its loan as follows: reduction of principal to P4,000,000; reduction of interest to 8% payable annually beginning Dec 31, 2022; accrued interest on December 31, 2021 is condoned and the principal payment was reset to December 31, 2024. How much is impairment loss should Essence Finance record on December 31, 2021?

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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