SMS Leasing Corporation has numerous lessees in its different commercial establishments in Metro Manila. The stoppage of economic activities during 2020 resulted to backlogs in rentals by majority of its lessees. At December 31, 2020, the company listed its more than a thousand lessees with their respective backlogs in rentals that totaled P10,520,000. This amount included P480,000 interest and P40,000 penalties and surcharges. The lessees negotiated for a restructuring of its debt and SMS Leasing agreed to the following: Interests, penalties and surcharges are waived/condoned. The remaining P10,000,000 is payable as follows: P4,000,000 at Dec. 31, 2021 P3,000,000 at Dec. 31, 2022 P3,000,000 at Dec. 31, 2023 The market rate of interest for obligations in the leasing industry is 8%. Round off present value factors to three decimal places. How much is the impairment loss recognized by SMS Leasing Corporation as a result of the restructuring?
SMS Leasing Corporation has numerous lessees in its different commercial establishments in Metro Manila. The stoppage of economic activities during 2020 resulted to backlogs in rentals by majority of its lessees. At December 31, 2020, the company listed its more than a thousand lessees with their respective backlogs in rentals that totaled P10,520,000. This amount included P480,000 interest and P40,000 penalties and surcharges. The lessees negotiated for a restructuring of its debt and SMS Leasing agreed to the following:
Interests, penalties and surcharges are waived/condoned.
The remaining P10,000,000 is payable as follows:
P4,000,000 at Dec. 31, 2021
P3,000,000 at Dec. 31, 2022
P3,000,000 at Dec. 31, 2023
The market rate of interest for obligations in the leasing industry is 8%. Round off present value factors to three decimal places.
How much is the impairment loss recognized by SMS Leasing Corporation as a result of the restructuring?
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