Cozy Bank loaned a borrower P7,500,000 on January 1, 2018.Problem 7-6 (IAA)The terms of the loan were payment in full on2023, plus annual interest payment at 12%.January 1,The interest payment was made as scheduled on2019. However, due to financial setbacks, the borrower wunable to make the 2020 interest payment.January 1,The bank considered the loan impaired and projected thecash flows from the loan on December 31, 2020.The bank accrued the interest on December 31, 2019, but dianot continue to accrue interest for 2020 due to thimpairment of the loan.Projected cash flowsAmount projectedon December 31, 2020Date of cash flowDecember 31, 2021December 31, 2022December 31, 2023December 31, 2024500,0001,000,0002,000,0004,000,000Present value of 1 at 12%For one periodFor two periodsFor three periodsFor four periods0.890.800.710.64Required:1. Compute the present value of the loan receivable onDecember 31, 2020.2. Compute the impairment loss on the loan receivable.Prepare journal entries for 2020, 2021 and 2022.212

Loan is described as an amount which one party provides to another party who is in the need of…

Problem 7-6 (IAA) Cozy Bank loaned a borrower P7,500,000 on January 1, 2018. The terms of the loan were payment in full on 2023, plus annual interest payment at 12%. January 1, The interest payment was made as scheduled on 2019. However, due to financial setbacks, the borrower unable to make the 2020 interest payment. January 1, The bank considered the loan impaired and projected th. cash flows from the loan on December 31, 2020. The bank accrued the interest on December 31, 2019, but dia not continue to accrue interest for 2020 due to the impairment of the loan. Projected cash flows Amount projected on December 31, 2020 Date of casbh flow December 31, 2021 December 31, 2022 December 31, 2023 December 31, 2024 500,000 1,000,000 2,000,000 4,000,000 Present value of 1 at 12% 0.89 For one period For two periods For three periods For four periods 0.80 0.71 0.64 Required: 1. Compute the present value of the loan receivable on December 31, 2020. Compute the impairment loss on the loan receivable. 3. Prepare journal entries for 2020, 2021 and 2022. 212

Problem 7-6 (IAA) Cozy Bank loaned a borrower P7,500,000 on January 1, 2018. The terms of the loan were payment in full on 2023, plus annual interest payment at 12%. January 1, The interest payment was made as scheduled on 2019. However, due to financial setbacks, the borrower unable to make the 2020 interest payment. January 1, The bank considered the loan impaired and projected th. cash flows from the loan on December 31, 2020. The bank accrued the interest on December 31, 2019, but dia not continue to accrue interest for 2020 due to the impairment of the loan. Projected cash flows Amount projected on December 31, 2020 Date of casbh flow December 31, 2021 December 31, 2022 December 31, 2023 December 31, 2024 500,000 1,000,000 2,000,000 4,000,000 Present value of 1 at 12% 0.89 For one period For two periods For three periods For four periods 0.80 0.71 0.64 Required: 1. Compute the present value of the loan receivable on December 31, 2020. Compute the impairment loss on the loan receivable. 3. Prepare journal entries for 2020, 2021 and 2022. 212

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 19P

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A ski company takes out a $400,000 loan from a bank. The bank requires eight equal repayments of the loan principal, paid annually. Assume no interest is paid or accumulated on the loan until the final repayment. How much of the loan principal is considered a current portion of a noncurrent note payable in year 3? A. $50,000 B. $150,000 C. $100,000 D. $250,000
B. MATATAG Bank loaned P5,000,000 to a borrower on January 1, 2019. The term of the loan require principal payments of P1,000,000 each year for 5 years plus interest at 8%. The first principal and interest payment is due on January 1, 2020. The borrower made the required payments during 2020 and 2021. However, during 2021 the borrower began to experience financial difficulties, requiring the bank to reassess the collectability of the loan. On December 31, 2021, the bank has determined that the remaining principal payment will be collected as originally scheduled but the collection of the interest is unlikely. The bank did not accrue the interest on December 31, 2021. Present value of 1 at 8% 0.926 For one period For two periods For three periods 0.857 0.794 1. What is the impairment loss for 2021? а. 423,000 b. 217,000 c. 222,000 d. 0 2. What is the interest income for 2022? a. 126,160 b. 142,640 c. 240,000 d. 0 3. What is the carrying amount of the loan receivable on December 31,…
Solid Bank loaned P5,000,000 to a borrower on January 1, 2018 The terms of the loan require principal payments of P1,000,000 each year for 5 years plus interest at 8%. The first principal and interest payment is due on January 1, 2019. The borrower made the required payments during 2019 and 2020. However, during 2020 the borrower began to experience financial difficulties, requiring the bank to reassess the collectibility of the loan. On December 31, 2020, the bank has determined that the remaining principal payment will be collected as originally scheduled but the collection of the interest is unlikely. The bank did not accrue the interest on December 31, 2020 Present value of 1 at 8% For one period For two periods For three periods 0.926 0.857 0.794 What is the carrying amount of the loan receivable on December 31, 2021> O A.2,000,000 B.1,925,640 O C.1,640,360 O D.1,783,00
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Solid Bank loaned P5,000,000 to a borrower on January 1, 2018. The terms of the loan require principal payments of P1,000,000 each year for 5 years plus interest at 8%. The first principal and interest payment are due on January 1, 2019. The borrower made the required payments during 2019 and to 2020. However, during 2020 the borrower began to experience financial difficulties, requiring the bank to reassess the collectability of the loan. vnGomo) au9 Vd bonsbneu 6w lodio 69y tne ert On December 31, 2020, the bank has determined that the remaining principal payment will be collected as originally scheduled but the collection of the interest is unlikely. The bank did not accrue the interest on December 31, 2020.o 82 o1 1supe b6dblori e beniste16 bns PE to est s bs261obstert Present value of 1 at 8%vs beidpiew s no belugmo j2oi bap ab obsi snl.noitibe nl For one period For two periods For three periods 0.926 avsb D21o glnevis91 2nu6 Sonitotisteri mort bovia 0.857 ini rdabo to inuoms ei…
Solid Bank loaned P5,000,000 to a borrower on January 1, 2018. The terms of the loan require principal payments of P 1,000,000 each year for 5 years plus interest at 8%. The first principal and interest payment is due on January 1, 2019. The borrower made the required payments during 2019 and 2020. However, during 2020 the borrower began to experience financial difficulties, requiring the bank to reassess the collectibility of the loan. On December 31, 2020, the bank has determined that the remaining principal payment will be collected as originally scheduled but the collection of the interest is unlikely. The bank did not accrue the interest on December 31, 2020. Present value of 1 at 8%For one period 0.926For two periods 0.857 For three periods 0.794 1. What is the interest income for 2021?2. What is the carrying amount of the loan receivable on December 31, 2021?
Solid Bank loaned P5,000,000 to a borrower on January 1, 2018. The terms of the loan require principal payments of P 1,000,000 each year for 5 years plus interest at 8%. The first principal and interest payment is due on January 1, 2019. The borrower made the required payments during 2019 and 2020. However, during 2020 the borrower began to experience financial difficulties, requiring the bank to reassess the collectibility of the loan. On December 31, 2020, the bank has determined that the remaining principal payment will be collected as originally scheduled but the collection of the interest is unlikely. The bank did not accrue the interest on December 31, 2020. Present value of 1 at 8%For one period 0.926For two periods 0.857 For three periods 0.794 1. What is the impairment loss for 2020?2. What is the interest income for 2021?3. What is the carrying amount of the loan receivable on December 31, 2021?
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Problem 1 (Loans Receivable) Solid bank loan P5 million to a borrower on January 1, 2018. The terms of the loan require principal payments of P1 million each year for five years plus interest at 8%. The first principal and interest payment is due on January 1, 2019. The borrower made the required payments during 2019 and 2020. However, during 2020 the borrower began to experience financial difficulties, requiring the bank to reassess the collectability of the loan. On December 31, 2020, the bank has determined that this remaining principal will be collected as originally scheduled but the collection of the interest is unlikely. The bank did not accrue the interest on December 31, 2020. Question No. 1.1: What is the impairment loss for 2020? Question No. 1.2: What is the carrying amount of the loan receivable on December 31, 2021?
2018. The terms of the loan were payment in full on January 3. What is the carrying amount of the loan receivable on Problem 7-11 (IAA) Global Bank loaned P9,000,000 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 the 2020 interest payment. The bank considered the loan impaired and projected the cash flows from the loan on December 31, 2020. The bank has accrued the interest on December 31, 2019, but did not continue to accrue interest for 2020 due to the impairment of the loan. The projected cash flows are: Amount projected on December 31, 2020 Date of cash flow December 31, 2021 December 31, 2022 December 31, 2023 December 31, 2024 1,500,000 2,000,000 2,500,000 3,000,000 The present value of 1 at 12% is .89 for one period, .80 for two periods, .71 for three periods, and…